Deadlines have been missed, workers are still in limbo and the airline forecasts a loss of €30 million by next March. But Air Malta’s CEO, Peter Davies, is still brimming with confidence despite the problems being worse than expected. He speaks candidly to Christian Peregin after almost six months in the job.
There is no receptionist to welcome guests at Air Malta’s head office in Luqa. The dark hall on the first floor makes you forget that the sunshine outside is blinding. Every door is shut and the 1970s decor is a reminder that this company is crying out for change.
...I won’t play hostage to a deadline- Davies
But when Mr Davies’ black Range Rover roars into the parking lot, there is a flurry of activity and the building is suddenly full of friendly people looking busy. Towering over them and having jogged up the stairs with athletic enthusiasm, Mr Davies is instantly disarming.
“As a human being, I can understand there’s an immense level of frustration. A bunch of foreigners came in, we missed timetables and there’s an element of clutter,” he says.
“The problems were deeper than I anticipated. It is down to the core. But the message is this: Air Malta is fixable. It has every capability of being turned around.”
Mr Davies has been on the job for almost six months and, by local standards, is paid handsomely for his efforts.
I am responsible for the livelihood of 1,300 people. I take that responsibility seriously. I’m not going to fritter away their jobs because of some pre-ordained timetable- Davies
Yet, he has already failed to deliver on his first promise to workers: that they will have their early retirement schemes on offer by the beginning of August. More than a month after deadline, negotiations with the unions are ongoing. So what’s the bone of contention?
“There’s no bone of contention. We set an ambitious timetable and we missed it. Fact of life. I could have accelerated things and said enough is enough but I won’t play hostage to a deadline. I am responsible for the livelihood of 1,300 people. I take that responsibility seriously. I’m not going to fritter away their jobs because of some pre-ordained timetable.”
Neither, he says, will he be conditioned by the €10 million budget allocated to the voluntary retirement schemes. “We will come up with the right package that allows us to be as fair as possible and people will be confident we’ve done our best.”
Besides negotiating “exit agreements”, Air Malta is also discussing new collective agreements with the unions involved, which is part of the reason for the delay, he says.
Air Malta was also meant to have a new web portal by June but this failed to materialise.
So, what targets have been met so far?
“Targets?”
“Have you actually achieved anything?”
“That’s a good question,” he replies. “We’ve identified 162 projects spanning all the aspects of business that we need to tackle. There’s a huge amount of work being done on an organisational level.”
But talk of airy-fairy action plans is all workers have heard for years.
“And they’re absolutely right. It’s frustrating. It’s also frustrating for me. Nothing has changed yet because at the moment we have to make sure we get all the elements in place.... Now I think we have the right structure but we need to find all the right people.”
Despite previous promises for the airline to be in new shape by the end of summer, Mr Davies now says the “metamorphosis” will only be visible by “the end of spring, beginning of next summer”.
He compares the company to an iceberg where only the slow-moving tip is visible but all the important abrasive processes are being conducted underwater.
“I think there was a level of anticipation that we were charging white knights with a magic wand... life is not like that.”
Air Malta is still waiting for the European Commission to approve its restructuring plan but Mr Davies says the correspondence so far has been “timely” and, having dealt with the Commission before, he understands their rigorous procedures. “At the end of the day we’re both making sure our recovery plan is robust and successful.”
It’s frustrating. It’s also frustrating for me. Nothing has changed yet because at the moment we have to make sure we get all the elements in place.... Now I think we have the right structure but we need to find all the right people- Davies
Air Malta is also negotiating with its commercial partners, including Malta International Airport and Sky Gourmet, to improve contracts that have been blamed for crippling the company. Despite seemingly lacking a strong bargaining chip, Mr Davies is upbeat about the discussions.
“We’re just finalising negotiations with the airport for substantial reductions in our current costs. I’ve also had good meetings with Sky Gourmet to make them understand why we need to change our product, because we do, and they’re looking forward to working with us.”
So how do you convince a private company like MIA to give you beneficial rates?
“You do it forensically. You do your research about other EU airports and see if there’s anything out of synch. You get your facts and figures right and offer intelligent conversation. When I say I produce half MIA’s traffic but do not get a volume discount, which goes contrary to the law of the jungle, they start to listen. It’s about being a good businessman. I look them in the eye – which no one has ever done to them before – and I say this is unacceptable, it’s bull... It’s very difficult for people to look you in the eye and say it is not.”
The toughest part of the restructuring, he says, will be the “cultural transformation”, getting employees to realise they are working for a competitive business not a bottomless pit with an infinite supply of taxpayers’ money. And with more than a third of the employees facing the axe, there’s a huge sense of apathy.
Mr Davies has been in their position in the past and insists he understands them perfectly. All the enthusiastic talk about the airline’s turnaround is like a “kick in the teeth” to them, he says.
Besides having experience in breathing life into dying airlines, Mr Davies, a pilot by training, also boasts of having tried his hand at most jobs in an airport.
“My parents did not give me the money I needed to learn how to fly so I worked my way up through the processes: loading planes, driving trucks, moving baggage.”
He says he knows the “tricks” that some workers get up to and he’s not stupid enough to think that everyone at Air Malta pulls their weight.
There are too many people working for the company and some simply do not have the necessary talents, he insists. In many cases, he thinks this is the result of “previous regimes” and the fact that the company never changed.
Mr Davies’s commitment has also been questioned. He has been criticised for getting paid too much and then going on vacation in the height of the busy summer period. But he says he went to the UK to be with his mother who underwent a serious operation. “I was working from home. I haven’t had a vacation,” he insists.
At the end of the day I will be judged on how successful the airline is once we’ve turned it around as opposed to whether I took an extra couple of days on holiday.- Davies
“But that’s fine. At the end of the day I will be judged on how successful the airline is once we’ve turned it around as opposed to whether I took an extra couple of days on holiday.”
He admits there is a huge amount of animosity and adversarial comment in his regard but he considers it to be “water off a duck’s back”. His response will come when he turns Air Malta into a “lean, mean, consumer-orientated airline”.
Suddenly, he remembers one tangible achievement: the removal of freebies for politicians and other VIPs. Sure, he admits, it was partly a symbolic gesture. “But you will not believe how many people were eligible for them.”
Perhaps one could have expected more in the past six months but what Mr Davies lacks in tangible achievements he more than makes up for in confidence. And if his ability to brighten up the dimmest of halls has any bearing on his ability to revive a crippled airline, there may be some hope yet.