Despite being the end of an era for Air Malta, Malta will still have its own national airline. Malta Hotels and Restaurants Association (MHRA) President Tony Zahra reacted to the latest news about a new national airline commenting that this prospect “brings hope for a better future” for the travel and tourism sector in Malta.
“All stakeholders along with Government must do their utmost to protect this unique chance to do things different and better,” Mr Zahra said in a statement. He remarked that MHRA has always been consistent and vociferous that Malta needs its own national airline. “If we fail to have a national airline a very substantial part of our economic independence gained through great sacrifices since independence will be lost and Malta will no longer have its destiny in its own hands.”
He added that the new airline replacing Air Malta must focus its mission with nothing related to partisan politics interfering in the process. Indeed, MHRA believes that the next step now should be that of having private participation in the new shareholding structure.
In the meantime, MHRA augurs that the transition will be as seamless as possible and that any lost connections will be made up for by other constructive and effective initiatives.
On Monday (today), Prime Minister Robert Abela and Minister for Finance Clyde Caruana announced the end of the Air Malta saga and the beginning of a ‘profitable’, ‘viable’ and ‘sustainable’ new airline.
“50 years ago we established the Maltese national airline, despite all doubts surrounding it at the time. We all know that for many years the airline, despite still offering service, was doing so with uncertainty,” Dr Abela said. He added that these uncertainties were caused by various factors, subtly referring to the large volumes of employed people with Air Malta and lucrative terms of employment. “Everyone knows and where they originated from, but we shouldn’t point fingers.”
“At this point, Malta’s primary interest in the aviation industry, is to have a national airline built on the principles of viability and sustainability. Unlike what Air Malta experienced in the past years,” Dr Abela remarked.
Minister Caruana stated that for the past 20 years, Air Malta made the equivalent of €356 million in losses. “Lets put business aside. What family spends more than it earns?” he asks. He explained that prior to COVID-19, Air Malta lost €4,075 every time a plane took off. “Now, with the new airline, we will be making an average of €2,866.”
He also explained that in 2019, Air Malta spent €48 million a year in salaries to operate 10 aircraft. “Now, to operate eight aircraft, we will spend €22 million,” Minister Caruana added.
Mr Caruana added that for the past two centuries, the company always asked the Government to inject more money to keep it afloat. Nonetheless, he adds, “what most people did not realise is that when Malta entered the EU in 2004 and therefore made part of the single market, it made sure that companies like Air Malta needed to turn a profit, for them to keep existing.
What’s next? What will the new airline offer?
- Routes: The new airline will keep most of its flights: Amsterdam, Berlin, Brussels, Catania, Dusseldorf, London Gatwick and Heathrow, Lyon, Madrin and Milan (Linate). It will also keep flying to: France – Charles de Gaul and Orley, Prague, Rome, Germany – Munich and Zurich and Vienna but with increased frequency.
On the other hand, flights to: Palermo, Naples, Nice, Geneva, Lisbon and Tel Aviv will be terminated in the new airline. The plan is also to add a new Copenhagen route by year three of establishment.
- Partial privatisation. This takes shape in the form of shares and strategic partnerships. Nonetheless, the Government will still have the majority shareholding. Minister Caruana remarked that this is crucial not only for the sake of profit but to ensure good governance, “so that what happened in the past will never repeat itself.”
- A work force of 375 employees.
- The Air Malta name and brand is currenyly owned by the Government - but it will have to bid for it in a competitive tender process.
- Malta has reached an agreement with the European Commission to be given €350 million. €300 will be used to buy three aircraft so that three out of eight aircraft it operates property of the new airline. This gives the new airline assets. The other €50 million will be working capital to facilitate the company’s operations.
- The new airline will re-purchase the landing slots at London Gatwick and Heathrow.
- Seat load factor to increase to 87.8% from 74%.
When will these changes take place?
Air Malta will officially cease operations exactly 50 years after its registration, paving the way for the new airline to have its first ever flight the next day, on the 31st of March 2024.
On 1st November, customers who have a ticket booked after the 30th of March 2024, will have the opportunity to apply for a refund. With regards to the KMiles system, Minister Caruana explained that the airline will monetize all the points gathered by the customers.
On the other hand, December 2023, the airline will start its recruitment process, by offering vacancies to those who work with Air Malta, so that by the time the new airline starts operating they already have the job ensuring a seamless process.
Establishing the Maltese national airline
Air Malta was registered as a limited liability company on the 30th of March 1973. Dom Mintoff, the then Prime Minister and Minister for Civil Aviation granted the Air Malta an Air Service License subject to the condition that the Government of Malta, Maltese citizens or companies established under Maltese law (as well as under the control of Maltese citizens) must maintain substantial ownership and full control of the airline, at all times.
The airline was formed with the aid of Pakistan International Airlines (PIA) with a share capital at Lm750,000 of which Lm530,000 were issued, 51% by Air Malta and 20% by PIA. The remaining 29% of the capital share initially went unclaimed.
Air Malta’s initial operations were with two wet-leased Boeing 720Bs from PIA on 1st April 1974 with scheduled flights to London, Birmingham, Manchester, Rome, Frankfurt, Paris and Tripoli. Whilst it eventually increased its fleet of leased aircraft, nine years after its establishment Air Malta ordered its first new aircraft, to be delivered in March 1983.
In the 90s, the airline set up CargoSystems with the intention of offering a variety of services that include third-party handling, warehousing, marketing, on-board courier services and specialised scheduled freighter operations.
Despite years of success, Air Malta started struggling, millions in losses over the years. The pandemic gave the airline its final blow and the airline was making a daily loss of €170,000 to operate.
Last year, Minister for Finance Clyde Caruana stated that over the years Air Malta was flooded with hundreds of workers that weren’t required haemorrhaging €40 to €50 million a year. He explained that the company was implementing strategies that weren’t making sense, including paying its workers for early retirement.
Eventually, the Government announced a restructuring plan, halving its employees down to 420. The Government offered a voluntary transfer scheme to employees who work as cabin crew and administration to be given alternative employments. Others were given the option of voluntary redundancy scheme.
In the meantime, the Government was in constant contact with the European Commission who was Air Malta’s last chance at surviving. Nonetheless, the Commission ultimately rejected the Government’s proposal to inject €290 million into the airline and preferred a deal like Alitalia airline.
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