Air Malta will not exit the news. Not now, in the heat of controversy, nor for years to come, whether the controversy ends in a restructured, more efficient, airline or if it folds up. One of these two possibilities will be the outcome of the current evaluations taking place, the proposals that will be based on them, and the fly-path chosen.
At the moment the issue is mired in politics. In an interview with The Sunday Times over the weekend, Finance Minister Tonio Fenech, who was given responsibility for the airline after it had spent years under Minister Austin Gatt, let fly at the Labour opposition. He blamed Labour for its reluctance to sign a confidentiality clause. “Of course I blame them,” he said. “The opposition hasn’t had the decency to come and see the (rescue) plan.”
I am all for a consensual political approach to attempt to come up with a process to try to save Air Malta. I have to confess that I seem to be quite naïve in that regard, whatever the circumstances politicians stance themselves to gain maximum advantage from a situation, even if it has “crisis” written all over it.
Crisis is the description to apply to Air Malta. Several years running it has made substantial losses. The European Union, for reasons best known to it, killed a government proposal to intervene with increased share capital. The Commission only permitted the Maltese government to make a loan under strict instructions to come up with a viable restructuring plan.
Nationalist professionals with deep knowledge of how the EU works told me that the government had not put up enough of a fight over the share capital increase. Maybe so, but even if it had that would have plugged the hole in our legacy airline’s finances only for a short while.
The company needs fundamental restructuring. There was no need to bring in highly expensive foreign accountants to establish that.
The company’s sitting auditors, PWC, more than hinted at it, year after year. What Air Malta requires is not a simple accounting exercise. It needs to cut overheads, certainly. It also needs to digest issues beyond the realm of any consultants – such as how much it pays Malta International Airport.
When the government wanted to hive off several of Air Malta’s assets and operations to establish and privatise the MIA, its then chairman, Joseph N. Tabone, did his utmost to stop the process. He told me that he had told the government that the split would harm Air Malta. Has it done that? Are the allegations being made by critics of the government correct or not? Minister Fenech replied to criticism of the cargo handling operation. He did not do the same regarding what MIA is levying off Air Malta.
Nor did he clarify whether Air Malta is operating on a level playing field with the low-cost airlines that were induced with cash payments, and are still being subsidised, to connect with Malta. The tourism industry needs low-cost airlines. But sure as the sun also rises, the industry and Malta as a whole need Air Malta.
If the way forward goes beyond simple accounting, what is it? The pilots’ union contributed an obvious answer, though – sadly enough – it cannot be the only answer. The airline, said the union, has to develop and cultivate revenue-generating sectors. Cost savings have to be made. But without revenue-generating measures they will simply inflict necessary pain without essential gain.
Mistakes have been made in that regard, as Mr Fenech admitted. “In my opinion,” he bluntly said, “some routes introduced by low-cost airlines in the past had an impact on our airline. If there are areas in doubt, the doubt has to favour Air Malta. Unfortunately in the past it wasn’t the case.”
What does Minister Austin Gatt have to say to that? It is this sort of thing, candidly admitted by Mr Fenech, that makes all the unions and the Labour opposition angry and mistrustful, as well as the admission that a “mistake” was made last year, again under Dr Gatt, when 18 cabin crew members were employed against a directive given by the board and the government, which had said there would be no new employment.
I don’t blame them, but my advice to them is to look to the future. Jobs have to go – frankly, and Air Malta staff are fortunate that the government is making an effort to find them alternatives. But shedding jobs is only a first step. The airplane fleet and its costs have to be reviewed.
There has to be a stop to the glib excuse that the cost of fuel has exploded. It has done that for all of Air Malta’s competitors, low-cost and what remains of legacy airlines.
Provided Air Malta purchases and uses fuel efficiently, it should not affect competitiveness. All sides concerned have a bull to take by the horns.
The important thing is to know which the horns are and what they are made of.
Fail to understand that and adopt the necessary attitude, and the pain will be far worse than any hollow gain. That and the exercise engineered by the government will be much worse. It could spell the demise of the national airline, which is so essential to the whole economy, not simply to those who work in it.
The justification is not a one-off crisis in North Africa. It exists day by day.