The European Commission has not yet received any notification of state aid on behalf of Air Malta, a spokesman told The Times Business. At the same time, the spokesman refused to comment on the stage of negotiations on the airline’s future, what is being discussed and when the negotiations are expected to be concluded.
However, sources close to the Commission’s competition directorate said that the issues involved are quite straightforward.
“The negotiations are about restructuring of the airline and the negotiations are currently focusing on a business plan aimed at putting the airline back in the black over a number of years,” the sources said.
“The main bone of contention is whether to go for an outright restructuring using state aid – which will require the green light of the Commission – or a recapitalisation programme, meaning the injection of money to the company’s structure. Both choices require taxpayers’ money although the second option is not considered by the EU as a direct form of state aid.”
The sources confirmed that the talks have been ongoing for months and involved senior Air Malta and government officials as well as consultants from PricewaterhouseCoopers who are assisting the company in the negotiations.
The discussions are expected to be wrapped up in the coming weeks in order to give time to the government to negotiate with the unions prior to the start of the company’s new financial year, which normally has an April to March cycle.
The process is expected to involve a cost-cutting exercise which will affect all the company’s workers.
Speaking in Parliament a few days ago, Finance Minister Tonio Fenech said that talks with Brussels on the future of the national airline are in an advanced stage but cited confidentiality as a reason for not giving any further details on what is being negotiated until a final deal is struck.
Last January, Air Malta announced a loss of €31 million for the year ending March 2009, prompting the government to start negotiations for a tough restructuring programme for the company.
EU rules permit the granting of state aid to Air Malta as long as this is just a one-time opportunity and is tied up to a restructuring programme aimed at putting the national airline on a sound financial footing.
In the past years the EU granted its green light to similar state aid packages to other national airlines, the most recent being Alitalia.