Air Malta’s financial situation is facing a total meltdown and it will only be a fresh injection of taxpayer funds that can avoid the airline folding, according to financial projections.
As both the government and the airline refuse to give any details on the precarious financial situation at the national carrier, The Shift can reveal that until a few weeks ago, Air Malta’s accumulated losses exceeded the €150 million mark and projections of further and substantial losses have been made by company consultants.
The airline’s current financial situation is the worst ever registered since its inception, 45 years ago, and the government does not seem to have a rescue and restructuring plan, except for asking Brussels for approval of more State Aid.
Company sources told The Shift that although the government will be shifting the blame of these massive losses on the pandemic, the airline had been accumulating massive losses long before.
“Although the pandemic has had a big impact on the airline’s operations, leading to massive losses, mismanagement, abuse and wrong decisions have been the order of the day long before and the airline was already in massive financial difficulties,” the sources said.
Air Malta has not published its accounts, as required by law, for the past two years.
According to the last set of published accounts, for the year ending March 2018, the national airline had said that it managed to register a small profit of some €1 million. This was used politically by the Labour government to laud former Minister Konrad Mizzi’s ‘skill’ at turning around ailing State companies.
Yet it soon resulted that the registered ‘profit’ was just a ‘creative accountancy’ exercise, as the airline had postponed debts and included one-time profits, such as the sale of airport slots, to boost its accounts.
Company sources told The Shift that while the ‘real’ accounts should have showed losses of some €18 million by March 2018, these had doubled a year later, as Air Malta ended the following year (March 2019) with more than €30 million in the red.
Despite the dire situation at the airline, with most of its planes grounded and the tourism industry taking a hit, Economy Minister Silvio Schembri rarely makes any reference to Air Malta which falls under his responsibility.
The only concrete action which the inexperienced Minister took so far was to axe most of the experienced members of the board of directors and replace them with friends and acquaintances, mostly from his electoral constituency. The exception to his radical changes at board level was the Minister’s uncle, former Labour Minister Charles Mangion, who was kept as the airline’s chairman.
While confirming that the government will be asking Brussels for a new and ‘substantial’ State Aid package for the airline, Minister Schembri has declined to say how much taxpayers will be forced to contribute.
This is not the first time that Air Malta had to be saved by taxpayers.
In 2012, after years of losses, the EU had given the green light for an injection of some €200 million in the airline to avoid bankruptcy.
The aid was tied to a five-year restructuring plan which had to see the airline turn to profitability by the end of 2015.
The situation had become so bad in 2014 that then-Minister Edward Zammit Lewis and his politically appointed chairperson, Maria Micallef, were pushing to sell a majority stake to Alitalia, the ailing Italian national carrier.
Following fierce opposition, including from the Opposition and tourism stakeholders, the deal collapsed.