Finance Minister’s declarations on Air Malta prove Konrad Mizzi’s announcements in 2018 were false

Finance Minister Clyde Caruana’s handling of Air Malta, with an announcement of the sacking of employees, proves reports that the last audited accounts for the airline presented in 2019 were nothing more than a public relations exercise.

In March 2019, during the presentation of the company’s accounts for the year ending 2018, then Tourism Minister Konrad Mizzi had announced that, for the first time in 20 years, the airline, under his stewardship, had made a profit.

Flanked by then Air Malta chairman and former Labour minister Charles Mangion, as well as auditors from PriceWaterhouse Coopers who signed the audited accounts, Mizzi had announced an operating profit of €1.2 million for the end of the 2018 financial year.

He had also reassured Air Malta employees that now that he had “managed” to turn the page, they were going to have a bright future, with ‘big’ plans such as flying to New York and India.

Yet, the Finance Minister’s declarations last week on the axing of Air Malta employees – financed by taxpayers at some €15 million a year – confirmed press reports that the government’s declaration that the airline had made profits in 2018 was untrue.

Promotional material by the government on traditional and social media had dominated the debate, with Konrad Mizzi portrayed as Air Malta’s saviour. Yet observers had immediately indicated that the accounts presented were an exercise in creative accounting.

The big deceit

While the accounts for 2018 state that the airline made a €1.2 million operating profit, the assessment did not disclose that were it not for the one-time-sale of the Gatwick and Heathrow slots to the government, the airline would have made a €17 million loss.

In addition, expenses that should have been inserted in the 2018 accounts were reported the following year so the government could present a ‘positive’ picture for the national airline.

As an example, while the company said it was handling more flights than the previous year, the fuel bill in the 2018 accounts was less than in 2017, while using the same type of aircraft.

In 2017, Konrad Mizzi, aided by his lawyers, former president George Abela and his son Robert, now prime minister, had made a secret agreement with some 350 Air Malta ground handling workers to be hived off from the airline onto a government company.

It has now resulted that this exercise was never executed, and all the workers remained on Air Malta’s books.

Mizzi, again through the Abela lawyers, had also inserted an unheard-of clause on the collective agreement of pilots giving them a “guaranteed government job” with the same pay they had if made redundant by the airline.

In 2020, the government led by Robert Abela sacked some 60 pilots. However, after a court challenge, they had to be put back on taxpayer-funded jobs, because of the irregular clause signed-off by Mizzi and the Abelas.

More than €200 million since 2011

In 2011, the government had made an agreement with the EU to pump some €200 million over five years and save the airline from its demise.

Hundreds of workers were given generous early retirement schemes and a five-year restructuring plan was put into place.

By 2013, when Labour was returned to power, then Air Malta chairman Ray Fenech had confirmed that the airline was on track with the plan, and this was also confirmed in the accounts.

However, following the appointment of Minister Edward Zammit Lewis at the airline’s helm and the replacement of Fenech with Coca-Cola general manager Maria Micallef, the airline veered significantly from the plan’s execution, with the government shrinking the airline operations attempting to try to find a strategic partner.

Talks to sell a majority shareholding to Alitalia – now also closed – failed spectacularly, with Zammit Lewis replaced by Konrad Mizzi and chairperson Micallef showed the door.

While hundreds of additional employees were in the meantime put on the airline’s books, particularly before the 2017 elections, Mizzi embarked on a diametrically opposite direction, expanding the airline, and introducing new routes which continued to put the airline’s finances in a desperate situation.

Air Malta’s accounts for 2019, 2020 and 2021 remain outstanding despite the company’s obligation to publish them under the Companies Act. The Finance Minister has refused to disclose the accounts through a Freedom of Information request, citing “commercial sensitivity” despite every administration publishing the national airline’s annual accounts up until that point.

                           
                               
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viv
viv
3 months ago

Another messy, messy swindle…

carmelo borg
3 months ago

İllum Liskandli mhux kull jum qed nishmaw imma kull Siegha. İssa anke int bobby u missierek gejtu tiz zefnu fin nofs. İn nutar Mangion kien ma Korrat fuq il mejda meta habbar il famus Qliegh. MA TİSTHUX MİN ALLA Lİ HALLAQKHOM. X hin tigu biex torqdu il kuxjenza tniggizkom?.

Victor Formosa
Victor Formosa
3 months ago

Well done Labour Governmant. Mintoff will be turning in his grave. R.I.P. AIR MALTA. 3 years without accounts. Has Air Malta paid any taxes or VAT. What about any N.I. stamps. Cylde you need to amend the tax deficit. It’s 5 billion less what AIR MALTA owes.

Alfred Debono
Alfred Debono
3 months ago

Amongst other things

Francis Said
Francis Said
3 months ago

Edward Zammit Lewis, probably the most incompetent Minister ever in Malta’s political history, spent years chasing Alitalia as a strategic partner. It seems that he was unaware that Alitalia was on the verge of bankruptcy at the time.
Konrad Mizzi, on the other hand showed his corrupt nature by declaring that all was fine with Air Malta and signed a non valid agreement guaranteeing their job and remuneration.
Back then when another secret agreement, with the involvement of the Abela father and son (now PM) had agreed to reduce staff by 350, with the condition that they would be employed by the government.
This is gross bad decisions and governance. I wonder if all this mess should be debated in Court and all the lies, spins and outright misinformation should be brought to light and consequences being slapped on all individuals, including the Directors charged.
Now the question is what was Joseph Muscat’s involvement in all this?
If he knew nothing about the goings on then he should also be declared as incompetent. Now, it is rather difficult to believe that the then PM and the Cabinet not informed of what was going on.
This is another example of bad governance that has been perpetuated during the years of a PL administration, one must never forget the Vitals contract passed on to Stewart, the setting up of the AUM that was and is a complete failure and particularly the board who decided the this institution was to be classified as a University.
There are many more cases of bad governance that have cost the country millions of Euros. Well done former Finance Minister Edward Scicluna, who was spineless to the decisions taken by the “kitchen cabinet”. Only to be awarded the post of Governor of the Central Bank at a high salary plus all the perks.
Well done PL, you have managed to bring Malta and Gozo on it’s knees.

Michael Borg
3 months ago

It is unimaginable that the auditors PWC signed off the accounts, when there was hefty fuel bill still to be paid. If it wasn’t paid AND WAS DUE, it should have been shown in the accounts as an accrual which in turn would have decreased the ‘profit’ by the same amount.
THIS JUST DOESN’T ADD UP AND SOMETHING FUNNY WAS GOING ON.

Zhuhsi
Zhuhsi
3 months ago

With all the shenanigans and time fiscal time bomb planted by the Muscat/Mizzi team it will take extensive legal and financial forensic work to understand what our real financial position is, and what we will be bequething to future generations.

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