Warning that unless it is recapitalised Air Malta could face serious problems, The Times noted in a leader last July that the importance of the national carrier to the Maltese economy raises issues beyond the operations of a legacy airline. Four months down the line Air Malta is experiencing heavy turbulence. The European Commission has just approved a €52 million loan facility “to avoid a sudden disappearance of the airline, which would lead to serious disturbances in the Maltese economy”.
The sum will only keep Air Malta flying for a time. This means that, unless all stakeholders are determined to do what needs to be done, irrespective of the costs, the sacrifices and the pain, the aircraft sporting the Maltese cross that have been flying for over 36 years will be grounded, possibly for good.
The worst that can happen is to think that, once the money is raised, a solution to the airline’s problems is guaranteed. The loan is only part of the airframe, which needs power to remain in the air. That power is a determined will that ought to be shown by all concerned to keep Air Malta flying.
Volatility in exchange rates, the ever rising price of fuel, terrorism, health scares, online booking and, hence, a bigger facility for consumers to shop for the cheapest fares available, and low-cost travel are problems that have plagued the industry for years now. These problems have hit even big legacy carriers, let alone small companies like Air Malta. The situation has forced owners and airline executives to take stock and act accordingly. This meant taking tough and, yes, in some cases, painful decisions, such as job shedding as companies had to restructure their operations.
Did Air Malta follow suit? Did it restructure? A restructuring exercise was indeed launched a few years back. Six hundred jobs have been shed since 2003. Yet, the carrier lost an average of €31 million annually over the past two years. This summer, Air Malta carried more passengers than last year but the revenue dropped.
Evidently, something, somewhere is wrong and has been so for some time. The shareholder knows it and so must airline executives. Finance Minister Tonio Fenech let the cat out of the bag in his Budget speech last month. He made it clear the airline had serious financial problems and insisted a concerted effort had to be made to take account of the radical changes taking place.
A steering committee, which includes unions representing airline workers, has been set up to work on a restructuring programme. The government has promised Brussels it will “submit a restructuring plan within six months guaranteeing future viability of the services currently provided by Air Malta. Otherwise, Air Malta will have to reimburse the (€52 million) loan or undergo liquidation”.
There is no time to lose in pointing fingers or taking the RJ70s and AzzurAir skeletons out of the cupboard. This is a rescue operation that must be done with surgical precision. It will hurt, in some parts badly, but it is either that or certain death.
On its part, Brussels would need to realise that Air Malta is not just another company that can easily be allowed to go bankrupt if it fails to restructure. It is the island’s main economic lung, vitally important to its well-being. One wrong move and it could cause a haemorrhage. This is surely not what the EU Commission would like to see happening to a member state.