Italian airline Alitalia will buy just under half of Air Malta, a deal Tourism Minister Edward Zammit Lewis said would herald a turnaround for the Maltese carrier.
Alitalia, which is partially owned by Etihad Airways, would be buying a 49 per cent stake in the Maltese carrier, Dr Zammit Lewis said yesterday after the signing of a memorandum of understanding between Alitalia and the government. The MoU, he said, bound the government to enter into negotiations with Alitalia and not engage in talks with other airlines.
He stressed the government would still retain a majority shareholding in Air Malta.
The deal, he said, would expand Air Malta’s passenger network and make Malta accessible to tourists. It would allow for more favourable procurement because the airline would form part of a much wider and bigger group, he said.
“This will herald a turnaround for Air Malta. It will allow the airline to grow and look towards the future,” Dr Zammit Lewis said. Cautioning that the deal was still in its early stages, he said it would ultimately benefit Air Malta’s employees and their work would be guaranteed.
“Air Malta’s business model was not tenable. We have explained to the workers that they need to be on board. There will be certain challenges but this will afford them more opportunities. If the airline grows, then the workers will benefit,” Dr Zammit Lewis said.
Talks with unions will continue to be co-chaired by President Emeritus George Abela and Air Malta chairwoman Maria Micallef through a committee tasked with negotiating new collective agreements.
Dr Zammit Lewis said the MoU would be tabled in Parliament on May 25, when the confidentiality period agreed by both parties expired. He appealed to all stakeholders, including the Opposition, to pull together.
Asked how much Alitalia will be investing in Air Malta, Dr Zammit Lewis said the monetary value of the investment was still being discussed but it at stake was a lot more than a one-off cash injection. “This is not just about a monetary investment. The important thing is addressing Air Malta’s inherent problems,” he pointed out.
Technical negotiations were expected to be concluded by the end of July, he said.
Ms Micallef emphasised the importance of the deal in turning around the airline’s fortunes. “This deal will bring investment opportunities for Air Malta. Alitalia has been turned around by Etihad and will be profitable by 2017,” she noted.
Alitalia CEO Cramer Ball said: “We are on track to become a profitable entity by 2017 and we need to look and plan for the future, which is why we have decided to look closely to see whether Air Malta can fit into our strategic growth, particularly how our networks can complement each other in areas such as southern Italy.”
Alitalia said on its website a comprehensive due diligence would be carried out. “Once the due diligence is complete, the boards of Alitalia and Air Malta will make a decision on whether to proceed with an undertaking,” it said.
Flying colours
The first ‘Maltese air fleet’, owned and operated by Messrs Instone Airlines (Malta), incorporated in 1946, started its operations in March 1947. It included three Airspeed Consuls, operated by former Royal Air Force pilots, and flew to Catania, Tripoli and Tunis. They originally carried five passengers but the capacity was eventually increased to 11.
Malta Airways was set up shortly afterwards, with the assistance of Robert Maxwell from the British Overseas Airways Corporation, in May 1947.
Media reports said the proposed company would have a predominantly Maltese-subscribed capital up to £150,000, operating air services to British, continental and North African airports after acquiring a Concordia 10-seater passenger aircraft.
Air Malta as we know it was set up by a parliamentary resolution on March 21, 1973. Nine days later, it was registered as a limited liability company with the late Albert Mizzi being appointed as its first chairman.
An air service licence, valid for 10 years, was issued on April 1, 1973.
Air Malta started operations on April 1, 1974 with two wet-leased Boeing 720Bs serving Rome, Tripoli, London, Manchester, Frankfurt and Paris. Three more similar aircraft were eventually bought, together with the original two.
In 1986, Air Malta purchased three Boeing 737-200s and ordered its first Airbus A320s in 1987.
The routes and the fleet kept increasing over the years.
Following the opening of Malta International Airport in 1992, Air Malta set up CargoSystems, which handles air cargo on Air Malta planes, and a cargo centre was set up at the airport two years later.
In January 2003, Lufthansa Technik Malta – a new joint venture set-up by Air Malta and Lufthansa Technik AG – started doing C-checks on Boeing 737 and Airbus A320 aircraft belonging to Lufthansa German Airlines, Air Malta and third parties.
Upon EU membership, Air Malta launched intra-European flights between Catania and London’s Gatwick airport. Setting up bases in the UK, a charter flight programme from the UK to a number of holiday destinations in Europe was also initiated.
The European Commission authorised a loan facility worth €52 million in 2010 to design a sustainable restructuring plan aimed at turning the airline’s financial situation around.