Air Malta cannot survive unless it sheds staff, European Commission sources have warned on the eve of a major restructuring exercise to keep the national airline afloat.
Brussels would never permit state aid to subsidise unproductive jobs, EU sources told The Sunday Times.
Finance Minister Tonio Fenech is expected to start holding meetings with the stakeholders, including the unions and the Labour opposition tomorrow to discuss the way forward for the airline.
The General Workers’ Union held a meeting at the airport with its airline members last Friday, telling them the union was not willing to accept any imposition.
The government has notified the European Commission of its intention to grant Air Malta urgent rescue aid which would then be followed by restructuring aid. Any aid has to be tied to a restructuring and downsizing programme agreed with the EU Commission.
Malta cannot, under EU rules, grant any state aid to Air Malta without prior consent from Brussels.
The government is opting for the state aid route after the commission refused to accept a proposed €100 million injection into Air Malta’s shareholding capital.
The EU’s rules also stipulate that Air Malta can only benefit once from state aid – if the restructuring programme fails, no further aid from public coffers would be allowed, meaning the company could be wound up.
It is not known how many of its 1,300 staff members the airline will need to shed though sources said the government would be discussing this issue with the unions.
Analysts said the government would need to move fast with its restructuring process if it is to be successful.
“In reality, in situations like this, the government does not have the time or the luxury to drag out talks with unions or the opposition,” they said.
Within two months of state aid approval, the government will have to submit its restructuring plan. If the commission is not satisfied with the plan, it could pull the plug on the aid.
The restructuring programme is not expected to have an impact on Air Malta’s operations and schedules for the time being.
Sources close to the Finance Ministry expressed hope that all those concerned acknowledged Air Malta’s challenges and that unless the government can go to the commission with a viable restructuring programme, the country may risk losing its national carrier.
Despite a restructuring plan in 2004, Air Malta failed to prosper, amid major fuel hikes and competition from low-cost airlines. Losses this year are expected to exceed the €31 million deficit registered last year, with the company even reporting losses during summer, despite a record-breaking tourism year.
The uncertainty has further demoralised the airline’s workers who believe they had made enough sacrifices through the 2004 restructuring plan.
One employee who preferred to remain unnamed said: “There’s a very gloomy atmosphere hovering above every Air Malta office. We are being kept in the dark, the department heads don’t seem to care, we don’t know if we’re going to be laid off, or at least whether we should be advised to look for another job.”
hgrech@timesofmalta.com