Any government plans to absorb workers shed from Air Malta might face problems as this could be interpreted as state aid, EU Competition Commissioner Joaquin Almunia has warned.
Mr Almunia said that, although there was nothing in the EU’s state aid rules that stopped the government from taking on redundant workers, it “might still be relevant” in the context of assessing state aid. He was replying to a letter of concern sent by Labour MEP Louis Grech, a former chairman of the beleaguered airline.
The Commission has to assess whether the government’s contribution to social costs constitutes state aid.
“A transfer of Air Malta employees to the government or state-owned agencies might become relevant in this context,” Mr Almunia said.
Air Malta said it would have to shed 511 workers as part of the five-year restructuring plan sent to Brussels for approval last May. Unions and management are discussing early retirement and voluntary redundancy schemes.
Unlike what happened in the case of other state entities, especially Malta Shipyards, the government has still not offered to absorb workers facing redundancy.
Mr Grech gave a positive interpretation to the commissioner’s letter and said it was clear that the state engagement of Air Malta employees did not contravene EU state aid rules.
“If the political will exists, a solution can be found to mitigate the hardship on Air Malta employees. The government, even as a shareholder, can offer fair redundancy payments or alternative employment, which conforms to the EU guidelines,” he said.
Asked for a reaction, Finance Minister Tonio Fenech said Mr Almunia’s letter confirmed the government’s stand.
“We have always told the unions that we have put a number of options in the restructuring plans to alleviate the social consequences of this restructuring. We are not excluding anything but nothing can be taken for granted until the Commission’s green light is given on the whole package. Commissioner Almunia has just confirmed our position.”
Commission officials told The Sunday Times last month the Malta Shipyards case was different because this time the government intended to make sure Air Malta survived and competed.
Brussels is examining the details of the plan submitted by the airline and has given the Maltese authorities until August 3 to reply to various technical questions raised by its experts during the first thorough review of the plan.
Following the publication of its preliminary decision, the Commission is not expected to take a final decision before December to provide enough time for member states and other interested parties to file their objections. In the meantime, the national airline is expected to carry on with its restructuring exercise. A total of €52 million in rescue aid was injected into the company last November to keep it afloat.
The Commission is probing the issue of land worth €58 million given to Air Malta just before Malta’s accession to the EU in 2004 to recapitalise the airline.