The Finance Minister yesterday asked Parliament to approve a loan to finance Air Malta’s operations but the amount has not been disclosed.
Tonio Fenech moved the first reading of a Bill “to regulate the raising of loans for the purpose of entering into relending agreements with Air Malta”.
The Bill is necessary because the government will be borrowing money not catered for in the Budget.
It is unclear whether the loan request would cover the airline’s losses for the whole of the financial year, which ends in March 2011.
When asked about the expected loss, a government spokesman said it was “premature” to provide a definite figure given that the financial year still had another four months to go.
However, he confirmed the losses sustained by Air Malta will be “higher” than those registered in the last financial year but insisted that “indications are they will be less than €50 million”.
Earlier yesterday, the General Workers Union’s general secretary, Tony Zarb said that, according to the presentation given to them by government-appointed auditors Ernst and Young, the airline was expected to make a loss of about €50 million, including €12 million on its summer routes.
Losses for 2010 have not been disclosed but sources said they were significant.
The company needs an urgent injection of money as it is facing short-term liquidity problems, including a difficulty to cover wages.
“Liquidity has long been a matter of concern because the airline was encountering problems to secure bank credit after posting a €31 million loss in the financial year that ended in March 2009,” the sources said.
Addressing workers outside Air Malta’s head office in Luqa, Mr Zarb said workers were not to blame for the state the company was in.
“Don’t allow anyone to point his finger at you and say that the situation is your fault. The fault lies with those who made bad decisions,” Mr Zarb said, insisting the union would keep workers informed of the situation.
He said the government had not yet outlined its proposals but insisted workers should have the final say on what happened at Air Malta.
The only proposal made in two meetings the union had attended so far, he added, was for the setting up of a steering committee that included representatives of the government, the opposition, management and the four trade unions recognised by the company.
Mr Zarb said the GWU accepted to be part of the steering committee.
The government is still waiting for the European Commission’s green light to give the airline state aid. Approval would, however, be conditional on a plan to cut down costs and make Air Malta viable. Cost cutting is likely to be accompanied by redundancies.
The Finance Ministry has not yet presented its restructuring proposals to the unions and officially no figure has yet been floated as to the number of jobs the airline will have to shed. However, a government spokesman said media reports that spoke of 1,000 job losses were “false”.
“The government has engaged Ernst and Young to draw up a restructuring plan to ensure the long term viability of the airline. This is still being drawn up. At no stage has the airline or the government decided or contemplated the sacking of 1,000 employees,” the spokesman said.
According to the latest published annual report, that of March 2009, Air Malta’s workforce numbered just over 1,400. Since then, the number kept decreasing to just over 1,200 presently.
The wage bill for 2009 was €51 million and the airline posted a loss of €31 million.
The Air Malta saga has also drawn in the country’s highest office with President George Abela chairing a meeting between the government and the opposition on Monday.
During a visit to General Soft Drinks yesterday, where he spoke of an “active Presidency” that was ready to support Maltese industry, Dr Abela said his role in the Air Malta affair was limited to chairing Monday’s meeting after being asked to do so by the government.
ksansone@timesofmalta.com