The government was likely to announce shortly that it had decided to pull the plug on talks with Alitalia to buy a stake in Air Malta, civil aviation industry sources said.
As the national airline’s annual general meeting approaches fast, the sources said the proposed deal with Alitalia would almost definitely not materialise, even if hopes of a last-minute breakthrough remained.
If the deal fell through, the government would have to decide whether it would launch another bid to find an alternative strategic partner immediately or wait until after the 2018 general election, thus also limiting the political backlash with regard to airline employees and the tourism industry, the sources noted.
“The ongoing negotiations with Alitalia and Etihad are going nowhere, and the government has now realised it cannot sell this deal, even though the Prime Minister and the airline’s chairwoman still want to follow through,” the sources said.
“While negotiations with Alitalia are technically over, the government is toying with the idea of starting some talks with other interested parties.
“However, political exigencies, including a possible general election by the end of next year, may force the government to postpone,” the sources added.
The ongoing negotiations with Alitalia and Etihad are going nowhere, and the government has now realised it cannot sell this deal
This newspaper is informed that others have approached the government on the sale of the national airline. Those expressing interest include a Canadian company with a Jordanian background and an international company based in Malta.
So far, the government is not known to have engaged formally with any of them because, according to a memo signed earlier this year, it is bound not to start any alternative talks until negotiations with Alitalia are formally over.
Meanwhile, Air Malta failed to comment on what its own lawyers said in court: that the company could go bust if an agreement with a strategic partner was not concluded by this month.
The company’s lawyers stated in July that the national air carrier was about €66 million in the red “and it may not survive if a strategic partner is not found by October”. The declaration was made in a case instituted by Air Malta against the Airline Pilots Association, which was threatening industrial action.
Questions on whether the financial situation had improved since July and if the October deadline still stood were unanswered at the time of writing. The airline would only say: “Air Malta’s financial results are currently being audited by external auditors and will be presented during the annual general meeting.”
The annual general meeting is normally held in October, but no specific date was given when the airline was asked. “The date of the annual general meeting will be communicated in due course,” a spokesman said.
According to the last financial report, Air Malta is expected to post a loss of €4 million for the financial year ending March 2016.
ivan.camilleri@timesofmalta.com