Air Malta completed the sale of its Luqa head office site for €26.7 million this month, according to the national airline’s interim financial results to September, which were published yesterday.
Significant progress has been achieved in cutting costs and increasing revenue
The sale, which contributed to enhancing the company’s liquidity, was the first phase in Air Malta’s plan to sell off its €66.2 million land portfolio.
The net proceeds of this first sale were €6.7 million, offsetting the €20 million deposit received in January when the promise of sale was signed.
Air Malta registered an operating profit of €400,000 – an operating improvement of €8.4 million over the same period last year when the airline registered an €8 million operational loss.
The income statement for the six months between April and September show a loss after deducting restructuring and finance costs of €5.5 million, an improvement of €6.7 million over the €12.2 million loss registered in the same period in 2011. This was Air Malta’s first interim operating profit in four years.
Chairman Louis Farrugia said the interim results showed significant progress “has been achieved at the operating level in cutting costs and increasing revenue – both essential steps that we need to be successful at if we are to secure the long term profitability of the airline”.
Mr Farrugia thanked all employees for their “vital efforts towards these goals”, and encouraged them to continue to press forward with the considerable change programme under way. “The results complement the publication this week of the airline’s redacted restructuring plan by the European Commission.
The 30-page document details the initiatives that are being taken to return the airline to profitability,” he said.
The chairman emphasised the critical situation the airline was in last year and said it was essential to start implementing the plan with urgency and well ahead of the Commission’s formal approval.
“Several of the initiatives listed in this published plan have already been implemented, including the 20 per cent reduction in capacity that was achieved by summer.
“No further reductions in capacity or release of slots over and above what we have already implemented are envisaged,” he said.
The board and management were now concentrating on further cost reductions and the continued assessment of supplier arrangements.
The second half of the financial year included the more difficult winter season, and losses were expected to be incurred for the financial year as a whole, he added.
However, the board of directors and management “are cautiously optimistic that operating results for the full year will be in line with the restructuring plan”.
While operating results had shown a marked improvement, the radical nature of the restructuring that was under way meant material, one-off restructuring costs would have to be incurred for the required transformation both of the airline and its business model to be achieved.
The board welcomed the Government’s commitment to subscribe to the second share issue of new equity scheduled for January.
At an extraordinary general meeting on September 27, shareholders approved an increase in Air Malta’s authorised share capital, and gave the board the green light to issue new shares amounting to more than €130 million.
The first share issue was held released in October. The Government subscribed to €78 million, and paid up the first call of 25.6 per cent, amounting to €20 million.
The Government has made a commitment to subscribe to the second share issue due in January amounting to €52 million.
Similarly to the first issue, the new shares will be issued in phases in line with the plan.