Air Malta has a respectable record that extends over 35 years during which it has operated as Malta's national airline. It has been instrumental in supporting the island's crucial tourism industry. It has opened new routes to cities and countries that would otherwise not have featured among the tourism markets that were tapped. So far, this has been done without resorting to state aid.

Now, like most other airlines, Air Malta faces substantial financial turbulence that must be overcome if the company can continue to be a major enabler of the tourism industry. This is indeed a formidable challenge as even the best managed airlines are facing serious viability problems.

The financial results of Air Malta for 2009 make quite dismal reading. A net loss of €31 million in this period is likely to be followed by a smaller but still substantial loss in 2010. The prospects of growth in passenger numbers are still not great, at least for this year. With most European countries barely out of recession and unemployment still on the rise in the countries from where the bulk of tourists come, it is unlikely that Air Malta could increase its market share either in absolute or relative terms.

Other threats facing European airlines in the coming months are the increased risk of terrorism, the strength of the euro and the weakness of sterling, the price of oil and the possibility of another economic slump if the recovery runs out of steam. All of these risks, or even just some of them, can mean greater challenges for Air Malta.

As a traditional airline, Air Malta still provides a level of service that carries a cost far in excess of that incurred by low-cost air carriers. This cost relates not only to the number of staff employed but also to the work ethics that are so different in the leaner low-cost companies. At least, this is an area about which the management of Air Malta can do something.

In the past several months, industrial relations have been characterised by sabre rattling that has led to needless confrontation at a time when all the stakeholders should be presenting a united front to secure the future of this company. Perhaps the publications of the financial results will serve as a wake-up call for a renewed sense of responsibility to avoid painful surgery in the near future.

The government and the opposition have both ruled out the option of privatisation. In the circumstances this is very understandable because it would be next to impossible for a privatised Air Malta to support the tourism industry as the national airline has done so far. They also seem to agree that further restructuring is necessary and that the burden of such restructuring should be shared fairly.

The issue of state aid must now be featuring highly on the government's agenda of outstanding business with the EU. Those who follow the aviation industry know how complex such talks can be because of the vested interests of different EU states to ensure that competition rules are not applied in a discriminating way.

One expects that the government's negotiators use every means to convince the EU competition authorities that Malta's tourism industry will be greatly undermined without a national airline that supports it. At the same time, workers' representatives must realise that further painful restructuring is inevitable.

Air Malta can only steer its way out of turbulence if all the stakeholders understand the gravity of the situation.