Malta will have a new national airline on 31 March 2024, replacing the Air Malta Plc.
Prime Minister Robert Abela and Finance Minister Clyde Caruana said that the current national airline, Air Malta, will fly until 30th March. The new airline, which will be under the company KM Malta Plc., will then start flying the following day.
This comes after the government and European Commission concluded talks which had been ongoing for around 30 months. Originally, the government had gone to the Commission requesting permission to inject funds into Air Malta, but evidently that was not accepted, and this route was chosen instead.
But the Air Malta branding might not necessarily be lost. Speaking to the press, Finance Minister Clyde Caruana said that Air Malta today rents the brand from a government company IP Holdings. As per the agreement with the European Commission, the new airline would need to tender for the branding.Prime Minister Robert Abela, speaking during a press conference, said that “we are ensuring that Malta will continue to have a national airline (…) One that is stronger, one that makes a profit, and one that serves this country on an economic and social level.”
Abela and Caruana said that the new company will have the same number of aircraft – eight – that Air Malta currently has, and that while the number of routes will reduce, the number of passengers that it will carry will be equivalent to the amount Air Malta carried in 2019.
In all, €350 million will be injected into the new airline. €50 million of this would be working capital, while €300 million would be in the form of assets. For example, unlike the current airline, the new company will own three of the aircraft (a new plane that recently started being used, and two more currently being manufactured) instead of leasing all of its aircraft. In terms of other assets, it will have the hangar in Malta and some land around it, and it will also purchase back the Heathrow and Gatwick slots from Malta Med Air.
Minister Caruana stressed that the change will not be a cosmetic one. The new airline will be flying to 17 destinations, as opposed to the 37 in 2019/2020. The 17 destinations will be Amsterdam, Berlin, Brussels, Catania, Dusseldorf, London Gatwick, London Heathrow, Lyon, Madrid, Milan Linate, Munich, Paris CDG, Paris Orly, Prague, Rome, Vienna and Zurich.
There will be increased frequencies to Rome, Munich, Paris (CDG), Zurich and Vienna. By the year 2026/2027, there is the possibility that Copenhagen will be added as a route.
The minister said that the seat load factor of the new airline will be better than that of Air Malta (which was around 75%), and is predicted to be around 90%. The planes will also fly for more hours each day than they do now, he said.
In a slide shown during the press conference, the new airline would be predicted to see its total revenue exceed total costs in 2025. Air Malta had been making a loss for years.
In addition, after three years, as per the agreement with the European Commission, the government will have to either start seeking a strategic partner, or go down the route of part-privatisation, however Abela and Caruana said that government will retain majority shareholding.
Timelines
It was explained that Air Malta will continue to operate flights up to and including 30th March 2024. All existing and new tickets still to be purchased for travel up to 30th March 2024 will continue to be fully valid and honoured for travel. All bookings for flights on Air Malta for travel on or after 31st March 2024 will be cancelled and Air Malta will refund customers the full cost (including taxes) of any tickets already issued with travel dates on or after 31st March 2024.
Refunds are guaranteed by the Government of Malta as the principal shareholder of Air Malta Plc. According to information provided by the government, customers can apply for refunds from 1st November 2023.
Air Malta tickets for travel on or after 31st March 2024 will not be transferred to the new airline.
From 1st December 2023 customers may book any flights operated by the new airline which will commence operations on 31 March.
Employees
The minister said that the expenditure on wages back in 2019, before covid struck, was €48 million, for over 1,200 employees.
But after the reduction in staff over recent years, it was said that the workforce of Air Malta p.l.c has already been rightsized to a level that is commensurate with its operations. With around 375 employees, wage expenses will amount to €22 million, Caruana said.
Air Malta employees interested in applying for employment with the new airline will be required to apply and will not be transferred over, it was said.
The new airline will have its own new employment conditions that are different from those of Air Malta plc. which, the Prime Minister and minister said, would be commensurate with market conditions. “We want to give a fair wage,” Caruana said.
The early retirement schemes which were signed in 2007 and 2008, resulted in €90 million hanging over Air Malta’s head, the minister said. Government has been engaged in discussions and negotiations with the Airline Pilots Association Malta (ALPA) and with the Union of Cabin Crew (UCC), to commute, liquidate and terminate the early retirement provisions in the Collective Agreements subject to certain conditions.
Pilots and cabin crew members will have up to four years after the new company opens to take up the early retirement schemes. However, pilots taking up the scheme would never be able to work with the national airline or in the public sector again, and cabin crew taking up the scheme wouldn’t be able to work within the public sector or with the national airline for six years. If all eligible persons take it, that would cost up to €90 million. This will be paid by the government.
After the 30th March 2024, Air Malta Plc. will start winding down and will eventually be liquidated.
Flypass
It was also said that the Air Malta Flypass Loyalty Programme will cease for earning and redemption of miles by 29th February 2024. The programme will not be transferred to the new airline. However, Air Malta p.l.c. will pay a monetary value of all unclaimed miles on all active Flypass accounts as at 29th February 2024.