Air Malta is refusing to say whether it consulted Brussels over the airline’s decision to reduce its fleet even though the European Commission warned against such a measure in 2011.
Describing its fleet reduction plan as a “temporary measure”, the national carrier last week announced it will start operating a fleet of just seven aircraft as from winter, going up to eight in summer. The company’s aim is to reduce its aircraft leasing costs by some €8 million a year.
The plan was immediately shot down by unions representing pilots and cabin crew, who insist it will not work.
It is understood that the plan announced last week was already being contemplated by the airline during discussions on its five-year restructuring plan in 2011.
However, the Commission has deemed that a fleet of less than 10 aircraft could compromise the airline’s commercial viability. It was so adamant on this point that it even included it in the letter it sent to the government over the agreed restructuring plan.
“The Commission notes that for a small airline like Air Malta, any further reduction in its fleet size will have a negative effect on the viability of the airline, without providing any meaningful market opportunities for competitors,” the EU executive said.
“Furthermore, the small size puts Air Malta at a disadvantage when financing aircraft, handling contracts and other matters where economies of scale bring tangible financial and competitive benefits. Any further reduction could have a cumulative negative effect on the airline’s ability to compete with larger competitors,” the Commission said.
The small size puts it at a disadvantage when financing aircraft and handling contracts
Despite the Commission’s opposition, the national airline, which is supposed to start registering a profit from March, has now decided to cut its current fleet by around 30 per cent.
At the same time,it said it was still planning to carry the same amount of passengers and fly the same routes as it is currently doing with 10 aircraft.
Before the restructuring plan started being implemented, Air Malta had an Airbus fleet of 12 aircraft. However, as part of the five-year plan it had agreed with Brussels to release two of its planes.
The airline did not comment when asked for a reaction to the problems identified by the Commission on the further reduction of its fleet. However, it said it was focused on boosting productivity, efficiency and product offering, not only to successfully meet restructuring targets but also to offer better value “in line with our post-restructuring growth plan”.
“All Air Malta’s initiatives are aimed at turning this airline around in the interests of all our employees and the rest of the country, including all our stakeholders and taxpayers,” the airline said.
In exchange for a €200 million injection in 2011, Air Malta agreed on a five-year restructuring to turn it around by March 2016. Although according to former Air Malta chairman Ray Fenech the plan was “on track” towards the end of 2013, the airline veered substantially from its targets registering losses of some €17 million in the past financial year.
The Times of Malta last Tuesday revealed that with the latest fleet reduction, Air Malta will have 143 employees per aircraft – a ratio that is twice as high as some comparable airlines.