Air Malta exceeded its goals for the last financial year – albeit slightly – and remained well on target to break even by 2014, CEO Peter Davies said.
Our aim is to get people thinking of Air Malta in a different way, so we have to make it more appealing
An improved fuel hedging policy and a well-planned programme to reduce its workforce were primary among the changes that led to this “extremely positive result”.
“We are slightly ahead of plan. We’ve had very encouraging results so far,” he told The Times.
“By the end of this financial year we would have spent €3.5 million less on fuel, thanks to clever buying, and €4 million less in wages. We are being diligent and achieving our targets.”
He explained that the company performed better than the set budget for the last financial year ending March 31: a loss of €37 million.
The actual figures were still being audited and will be published in the coming weeks.
He refused to divulge financial targets for this financial year, saying these were not public yet.
Although he was “cautiously optimistic” about getting the green light from the European Commission, possibly next month, for the restructuring plan submitted by the government in November, he said the company did not remain idle but continued to implement its programme.
The Commission has to decide on a €238 million package to help the airline return to profitability.
Some €130 million will come directly from state coffers and the rest will be obtained through Air Malta’s own contribution and commercial loans.
Before deciding, the Commission opened the plan for public consultation, receiving three positive and three negative replies.
Mr Davies would not say who had objected as the Commission retained their anonymity but Air Malta replied to each concern.
Mr Davies said the company was implementing a business re-engineering programme involving staff to make processes and work practices more effective, which is expected to cut costs further.
The staff shedding programme was going according to plan. So far, about 340 of the 500 employees who applied for the golden handshake have been released.
But Mr Davies acknowledged the uncertainty Air Malta employees were facing.
“We are not taking this lightly because we are dealing with people’s lives and we know there is a level of anxiety,” he said.
“We understand the frustration because of their inability to make plans. This is why we have taken the decision to inform employees of their definitive release date.”
Asked about the situation of cabin crew, who are claiming they were asked to remain until after summer, Mr Davies explained the firm had originally planned to shed 20 in this department but received 50 applications.
“Since we saw they wanted to leave the company, we decided to accept all of them and replace them with an internal call and by recruiting temporary staff. These are all being trained as we speak.”
He said Air Malta was maintaining a “very good relationship” with trade unions and worker representatives and, through them, the airline was obtaining a degree of flexibility according to the workload by working more in summer than in winter.
This system enabled the company to use fewer staff without having the wastage it had before.
Mr Davies explained the concept using a graph showing ample waste of resources in January and December, when work was at its lowest. By lowering the staff level throughout the year, Air Malta could fill the gaps with temporary staff and part-timers.
Turning to fuel, which represents 30 per cent of the airline’s costs, Mr Davies said a new policy on hedging saved €3.5 million in 2011. Otherwise the company would be spending €10 million more on fuel this year.
The company hedges between 75 and 80 per cent of its fuel requirements.“Our competitors, Ryanair and easyJet, were purchasing fuel that was 30 per cent cheaper than ours.
“We looked into our policy, changed it, created a new system and now buy fuel that was two per cent cheaper than theirs,” he said.
Air Malta hedged its fuel until winter 2013/2014 and was now hedging for summer 2014. Prior to this, Air Malta had two separate committees looking into hedging, one on oil and one on foreign exchange. The new system merged the two to be more dynamic and take quick decisions when the price was at its lowest.
Mr Davies said the policy change allowed the airline to be more competitive with ticket pricing. It was operating with 10 aircraft, down from 12, and there were no further plans to give up any slots or profitable routes.
He said people were booking late. Flights already booked for June looked “positive”, with July and August looking “promising”.
Mr Davies confirmed Air Malta is working on a rebranding plan, to be finalised over summer.
“Air Malta represents the values of Malta, so it’s responsible to promote the country.
“If we persuade more people to come here with Air Malta, it’s a win-win. Our aim is to get people thinking of Air Malta in a different way, so we have to make it more appealing. We are working on the plan, which we expect to finalise over summer,” he said.