Air Malta is going to reduce its staff complement by over 400, which amounts to around half of the personnel, Finance Minister Clyde Caruana announced on Friday.
The national airline currently has 890 employees.
It will be offering voluntary transfer schemes to administrative staff and cabin crew, starting from Monday, with the aim of around 110 being transferred out of the company to other government sectors.
Air Malta also plans to completely close its ground handling operation, and the 300 employees will be offered a similar scheme later down the line.
This comes following meetings the airline has been in with the European Commission, for the airline to be able to receive state aid funding.
The government does not yet know the amount in funding that the European Commission will allow the government to grant the airline, but Finance Minister Caruana said that these are changes that need to be done in order to save the airline, which has racked up over €258 million in operational losses since 2005.
He said that another change must be that the company is not tied to anything political, and that political decisions cannot be involved. Those decisions led to there being a loss which Air Malta could have done without. He said that a decision taken was to rationalise the company network as well. The network issues in the past led to the burning through of funds and the time has come to an end that the company experiments or continues to do things that cost funds but does not result in a return.
Plans to fly out of the European network have been scrapped, he said. There was an agreement to buy two planes capable of this, but this agreement has now been changed. Instead, the leases of planes capable of flying to Europe will be made which are cheaper than the leases the airline currently has.
He said that this has already been communicated to all the unions involved in the airline.
Finance Minister Clyde Caruana said that if these moves are not done quickly, the airline will likely need to close down.
The decisions being announced are strictly business related and make financial sense, looking at the interest of the country first and foremost, he said, and not necessarily politically.
In April 2021, he said, the Air Malta submitted a report asking for support to help with Covid-19. This was the second report, as the first report had been issued months prior but the Commission had a number of questions, which is why it was submitted again.
Caruana said that the EU Commissioner was clear, that the Commission lost its trust on the Air Malta situation as over the years as the Commission was promised many things that did not happen over the years to the detriment of the company. The Commissioner questioned how they could authorise certain things when a number of governments promised things that weren’t implemented. The Commissioner was right as if things promised years ago were implemented, I wouldn’t be making this announcement.”
After a meeting in November the Commissioner saw an amelioration of the company and was satisfied with the major change done in the behaviour of the company.
As regards the amount that Air Malta was asking in terms of state aid, the minister said he never made reference to the amount as he was aware of certain problems, instances that as a company it was facing for this request to be met by the EU Commission.
The company had already made a request for a restructuring and was given state aid back in 2012, he said. That means that under EU regulations, the one-time last time regulation, Air Malta could benefit once for state aid in ten years. So, the next time it can benefit is only 2026. More than that, the company was already technically in difficulty before Covid. The company had major challenges already, thus precluding it from achieving certain support since before Covid.
“Every time a plane flew and goes to any destination, that flight resulted in a loss for the company. So, I could never pretend that the Commission would come with a sum of cash. I am not expecting a large amount of funds,” he said, adding that the amount does not affect the decisions being made public today or if the airline will be able to continue flying.
He said if the airline didn’t have a fighting chance, he would not be delivering this press conference.
The Commission’s preferred option was to close the company and form a new one, but I told them I didn’t agree with this decision, and when Alitalia did it, it created problems. I believe there still is a chance for Air Malta to be saved.