EXCLUSIVE: Plan in place to dissolve the national airline, Air Malta

Tista’ taqra dan l-artiklu bil-Malti hawn

The government has established advanced plans to dissolve Air Malta later this year and transfer its few remaining profitable assets to a new airline, similar to what has already been done in Italy with Alitalia.

The plan will also include the redundancy of all of Air Malta’s workforce, from pilots to ground handlers, and the drawing up of new contracts based on current market conditions, for all those who will be hired by the new government-owned airline.

While all indications from Brussels point towards a failure in ongoing state aid negotiations by the government to obtain a green light for a new €290 million rescue package for Air Malta, a Plan B has been secretly drawn up to be implemented.

The Shift is reliably informed that the backup plan to be put implemented once negotiations on state aid fail – a plan already approved by Prime Minster Robert Abela and Finance Minister Clyde Caruana – aims at setting up a new national airline at the end of October while at the same time declaring the dissolution of Air Malta.

Through this plan, the government will aim to achieve a smooth transition from Air Malta to the new airline, with much less personnel and debts, giving the new airline a fresh start.

All Air Malta staff, still on the books at the date of dissolution, will be given redundancy notices, with some of them given the opportunity to apply for a new job with the new airline.

Yet contracts to be offered will be completely redrawn, with most of the current benefits enjoyed by Air Malta employees slashed. The new contracts will be based on the same conditions as those of low-cost airlines.

Customers with bookings made for Air Malta flights beyond the day of dissolution will either be getting a refund for their tickets or will be offered the possibility of travelling with the new airline. Yet not all current routes will be served by Air Malta’s new airline, as in order to get EU approval, the new airline will need to show that it is a completely separate economic operator and not a successor of Air Malta.

The Shift is informed that so far, the government has not yet decided whether to use, as a vehicle for this transition, Malta MedAir – an airline set up by disgraced former minister Konrad Mizzi in 2018 to compete with Air Malta – or to form a completely new entity.

Malta MedAir is a fully-owned government company that currently has an Airbus A320 on its books and the lucrative Gatwick and Heathrow slots it bought from Air Malta in a creative accounting exercise to make the national airline look profitable.

The Shift is informed that while the GWU has been informally briefed about this possibility, workers have been left clueless about their future.

The government is currently seeking the go-ahead from unions so it can postpone the pre-electoral promise to 577 Air Malta employees of a government job starting today, 11 August. Instead, the government is reneging on its agreement with the employees who signed up for the VET Scheme in the run-up to the elections only a few months ago.

They were promised a job for life in the lead-up to the general elections held in March, but they are now being presented with a golden handshake in a take it or leave it scenario, leading to anger among Air Malta employees who told The Shift they felt “betrayed“.

It is as yet unclear what those promised a government job would face in case of the dissolution of Air Malta.

Following years of mismanagement and changing market conditions, last year the government asked the EU for permission to grant Air Malta €290 million in state aid. The move was struck down in Brussels, with placed demands on Finance Minister Clyde Caruana to present a realistic proposal.

In 2012, following two years of talks, Brussels had allowed the government to pump some €130 million of state aid into Air Malta on the condition that a restructuring exercise would be concluded by 2015 and no more government intervention would be necessary.

Despite some restructuring, the company continued to register massive losses, putting it in an unavoidable bankruptcy scenario if no state intervention is granted soon.

According to strict EU rules aimed at safeguarding competition among European airlines, companies can only provide state aid once every ten years, on a ‘one-time, last-time, principle’.

Asked by The Shift to confirm that the government is working on a plan to dissolve Air Malta and create a new airline, similar to the exercise done in Italy to create Italia Trasporto Aereo S.p.A., better known as ITA, Finance Minister Clyde Caruana once again refused to reply to questions.