Air Malta’s acid test
The future of Air Malta is crucially essential for most people who directly or indirectly depend on the national airline’s successful operations for their livelihood.
These stakeholders include not only the airline’s employees who had to accept significant changes in their working conditions but also those involved in tourism and other economic activities, like financial services and electronic gaming. This reality is sufficient reason for the media to inquire how the airline is performing at this critical time when state subsidies are not permitted.
Over the last few weeks, news from Air Malta was mainly operational and, on a first reading, appear favourable. The airline registered a 27 per cent increase in the number of passengers during July when compared to the same period last year. Its chairman announced that two new aircraft would replace older models in the fleet next year. Ryanair has also agreed to enter into a joint venture to publicise the booking of Air Malta flights on its website.
However, the acid test for any company, especially one that is going through a challenging restructuring phase, is the financial results. The only recent news on the national airline’s financial performance is a comment made by the chairman that Air Malta is expected to break even for the financial year 2017-2018 that ended in March. This prediction still needs to be confirmed by the company auditors.
The scrutiny of the financial results needs to be thorough and objective if the airline’s stakeholders are to be reassured that the government plans for the company are indeed viable. Air Malta’s strategic ambition to become the preferred airline of the Mediterranean and North Africa comes with significant challenges to its management team.
The public – and, hence, the media – has the interest to know whether this change in strategy will indeed save the national airline from the severe financial straits it faced in recent years. There have been too many false dawns predicted by different politicians, including the strategic partnership with Alitalia, for people to rely on the reassurance of the minister politically responsible for Air Malta, in this case, Konrad Mizzi, that, this time, Air Malta is indeed on the road to recovery.
The report that Air Malta is not honouring its commitment to pay Enemed on time for aviation fuel was denied by the airline, as it had done with regard to previous reports that eventually proved to have been correct. Yet, the absence of more substantial financial information on the airline’s performance is worrying. Air Malta’s commitments with its bankers and suppliers can be rescheduled, especially if these are government-owned in part or in full. Only the details of the audited accounts can confirm whether the company’s financial situation is truly viable both in the short term and medium term.
The airline’s breaking even without resorting to one-time extraordinary transactions will indeed be a welcome development but it will only be the start of a long journey to long-term viability.
Last year’s financial results were kept under wraps for far too long. In the absence of meaningful financial updates in the last several months, one can only hope the audited accounts for the year ended March 2018 are published without further delay.
Like every business, Air Malta needs to pass the financial acid test every year.
This is a Times of Malta print editorial