Updated to include the Opposition’s reaction
Millions of euros in redundancy and severance packages are on the near horizon with the dissolution of Air Malta expected by the end of this year, The Shift can report.
The Shift is reliably informed that the plan to dissolve the national airline and start afresh with a leaner and more commercially-viable airline is now in full motion.
Ongoing discussions with Brussels are now focusing on how the transition to a new airline can be made without breaching the EU’s strict state aid rules.
Sources have explained that the European Commission has informally told the government there is no chance of the €290 million capital injection the government requested in 2020 being approved.
Given that, the government is now in the final stages of dissolving Air Malta once and for all and creating a new carrier in its stead.
The move is expected to be finalised by the end of the year.
It will include making all staff still on the airline’s books by its date of dissolution redundant and paying them hefty severance packages in line with their respective collective agreements.
Those payments are expected to reach tens of millions of euros. Pilots in particular have been given generous compensation guarantees through side agreements entered into between disgraced former minister Konrad Mizzi and the pilots union, ALPA, in January 2018.
While sources have confirmed the government has already chosen to close the national airline down, what is being discussed now is how a new airline could be established without falling foul of state aid rules.
The plan, The Shift is informed, is to copy the model used by the Italian government when it dissolved Alitalia and started ITA. But such an approach is not expected to come cheap for taxpayers.
The Shift is informed that negotiations are currently taking place to reduce the burden of the hefty redundancy package costs to be paid in line with collective agreements that were negotiated by Konrad Mizzi.
The biggest problem in this respect is the pilots’ side letters, through which Mizzi bound the government hundreds of thousands in payments for each pilot in the case of redundancy.
Konrad Mizzi’s side letter with pilots which is now haunting Robert Abela and Clyde Caruana.
The Shift reported last year about the government’s Plan B, which would close Air Malta down should the government not receive approval for a cash injection into the failing airline.
That Plan B has now been set in motion.
The move to close Air Malta follows years of losses at the national airline, mostly incurred through mismanagement by various administrations and the advent of low-cost airlines.
In 2012, following two years of talks, Brussels had allowed the government to inject around €130 million of state aid into Air Malta on the condition that it was to implement a strict restructuring plan that should have put the airline back in the black by 2015.
Despite some restructuring and positive results being registered by 2013, the plan went completely haywire shortly after that, putting it again in a state of bankruptcy if no further and the airline was facing bankruptcy without more state aid.
Prime Minister Robert Abela, who assisted Konrad Mizzi in the 2018 collective agreement discussions and Finance Minister Clyde Caruana have kept their cards close to their chests when it comes to Air Malta’s future and have continually insisted that Malta will still have some form of a national carrier, although it may not necessarily be Air Malta.
Opposition reacts
In a statement issued hours after The Shift’s revelations, the Opposition said, “the government has a duty to be honest, clear and transparent” on the future of Air Malta to allow the public peace of mind.
“After the Labour government abandoned the restructuring plan, one minister followed another with conflicting decisions insisting that Air Malta would be saved. Now, we’re hearing that Air Malta may be shut down.”
Referring to The Shift’s report, the PN stressed the repercussions on employees and their families, tourism industry operators and airline passengers. The Party said the government’s “inexplicable silence” only served to exacerbate concerns.
The statement was signed by Economy Spokesperson Ivan J. Bartolo, and Tourism Spokesperson Mario de Marco.
If the case why the further expense to have a new livery launched? Further funds down the drain?
New airline will be called ….
VALLETTA AIR !!
Whatever they decide to call it is irrelevant, if still run by incompetent politicians.
Well it is as easy as ABC. Air Malta management introduces a new route at an expense to set it up. Once successful, the management says we are running this route at a loos. The route would be eventually closed and the next day another airline runs the same route. Frankfurt route has been stopped and the next day Lufthansa flies three times per day and so is with Machester route. Air Malta stopped it and there are two other airlines flying daily instead. But some pockets are full with euros…….
The incompetency started under the PN administration when those fuel guzzlers were bought from England. Since then Air Malta never recuperated.
The incompetency started when Wistin Abela employed half of Zejtun in Air Malta. The RJ70 episode did not help. The way forward was more or less acceptable until during the last restructuring, which was starting to bring back a small profit for KM. But Labour knew better and kicked the foreign CEO out to be replaced by, I believe a woman, who didn’t have any expertise whatsoever, in airline management but you know, she supported Labour. So that was ok!
The machinations by Konrad Mizzi, other Ministers and incompetent Boards, put paid to any chance of KM surviving.
As for the new fangled airline, If they employ the same people and politicians continue to meddle………… kellimni hames snin ohra.
Millions down the drain!
Air Malta should be closed down because it is bankrupt and no new airline should be created. The Maltese traveller will not miss it as it will be replaced quickly by other more financially, efficient airlines. This is not something new. It was the case before Air Malta was set up.
Where will we get all these millions from?
Good question, and hard to answer when the ‘magic money tree’ (aka IIP Scheme) is going to cease the flow of money.
From the next generation and from the next and the next……
Your pocket, mine and that of our children.
Your pocket ………..eventually
The new airline shall be reflective of the efforts of the past few years … it shall be called … AirDyna
For the electorate it will simply be AirDaitu
Pretty good and well fitted name.
Will only take this government seriously when the Minister signing the agreement and the Finance Minister who approved this transaction are taken to court over irresponsible management of tax payers’s funds. Don’t even try to manipulate by using pandemic arguments. Minister Mizzi claimed that in 2017 the maltese airline was making profits.
Quoting “ Tourism Minister Konrad Mizzi has announced that Air Malta made a profit of €1.2 million, after a loss of €10.8 million in 2017.”
There is a clear indication of manipulation of facts.
Public Accounts Committee should start to investigate.
Freezing of take home pays before there is a extensive audit.
Ultimately these people are all responsible for this scandal.
Minister Mizzi
Mr James Fenech
Mr John De Carlo
Mr Matthew Degiorgio
Ms Charmaine St John
Mr Joseph Pirotta
You have all committed a crime against the Maltese Citizens aka tax payers of Malta.
Do you want to punish ALPA members because they did their work so well? What are Unions for if not to obtain the best terms and conditions for its members? You should be angry at all the other unions that sold their souls to the government of the day and obtained peanuts for the works.
Make every vote count !!!!
Yes, make every vote count but for that one has to convince those who abstained from voting in the past change their mind in future and go to the polling stations to cast their vote.
More people abstain from voting, not because of laziness, but because the situation is hopeless. No decent choices. Most politicians being self-serving sociopaths. And the majority of the population lack the political maturity to vote for the good of the country. This is a cultural issue with no solution.
Although much of what you say is right, one doesn’t attract anybody by pessimism.
There are, as I believe, enough people out there who might just wait to have an alternative to vote for and in my view, that alternative to vote for would be Repubblika or the ADPD. Maybe it would be better to have a new party that can attract voters from different political leanings, but with a centrist agenda.
I don’t think that it is all about the electorate being mature or not, those PL fanatics and those who are in the pocket of the PL are certainly lost for voting for change. I wouldn’t deny the younger generation among the Maltese electorate their maturity. The problem is in fact the alternative party to vote for. But also the electoral system that keeps the one party ruling system among the two big ones going.
It is therefore more a political and societal issue but less so a cultural one. There is a solution to it and the way towards that solution is published in Repubblika’s publication ‘Reforming Malta’s Parliament’, which has been widely ignored by the Maltese society.
I just like you to remember that, the Maltese are no better and no worse than any other European nationalities. The old ways of doing politics have become less attractive to the younger generations and also to those older then them for the experiences made. Everything was and is staying the same. Have a look around the EU member states and you will find plenty of similarities, even among the differences in cultural backgrounds.
In the end, we are all Europeans and the differences in cultural background are a positive, not a negative and Malta belongs to Europe as much as any other European country because there are aspects which bind us together, even when others prefer to deny it for the sake of their own personal and nationalist convictions.
There is still one thing that Malta has but other countries do not have and can’t gain by their own cultural background. Malta is the cultural bridge to the MidEast and that is an asset not enough appreciated by the EU as it should be.
Malta is also not just the negative with all the corruption of the PL govt and their, as well as their members and followers, anti-EU sentiments.
There is a different, a postive Malta, which is still suppressed by the current political situation. I can see its existence on this very website in all the articles published on here. I can also see it in the reports about the Daphne vigils held every month, by the protest marches organised by NGOs. It isn’t all for nothing, it is just a movement in progress, but it is thriving even when it looks to be proceeding in small paces.
Finally, the PL has managed to ruin the national airline and for the interim time they have to pay the pilots huge amounts of money for being dismissed until the new airline is established. It is clear that with a new airline starting, the same pilots will be employed with that.
One can state quite frankly by all the examples as revealed in recent times that the PL govt has a great deal of lack in responsibility towards the whole population of Malta.
Mizzi has proven to be a terrible negotiator. Steward deal €100 million if contract terminated regardless of reason and fantastic benefits for pilots.
Very generous with other people’s money.
What irks me is the fact that redundancy money most will be reemployed either with the new airline or some government department.
It’s hardly surprising Air Malta 🇲🇹 is losing money. Twice I have booked from Garwick to Malta business class cheaper than an economy ticket.
Interesting to note that side letter was only signed by a minister and nobody from KM board or KM management. Proves the level of interference of Government in KM commercial matters and not sure the Memorandum and Articles of KM without any KM signature makes this side letter totally illegal.
When one is made redundant he looks for another job, never paid any compensation. When one is forced to leave his job for bad conduct, it is unheard of that he is compensated with a 130k salary, cars, him & wife, 5star office and perks. All paid from the taxpayers, what if the Labour Party pays them or the 4th floor gang, why do we have to pay crooks, what is the thought behind this, the reason, what does Malta gain?
The things you have pointed out are in my opinion among the main reasons for why the numbers of people abstaining from voting are increasing. Slightly but continually because they have lost any trust into politics by the double standards displayed by this present government.
Malta gains nothing by the practices of this present govt and is always on the losing end of it, just the cronies are gaining as long as this government remains in power.
A very sad and global issue. The Elite few keep filling their pockets, while the middle class keeps being burdened by increasing taxes.
It is called corruption
The last audited financial statements of Air Malta plc filed with the Malta Business Registry are those for 2018.
It is now the responsibility of the Opposition to legally object to the liquidation on the above grounds. The public has a right to all the missing audited accounts, and we need to analyse the results to attribute the legal responsibility to the directors for wrongful trading.
Also, the Opposition has to seek a permanent blanket sanction by the MFSA of all directors holding office for at least the last five years.
This is what is called GOOD GOVERNANCE.
Surely, any documents or decisions made by disgraced individuals would be classed as invalid ?
AirMalta is dead…long live MaltAir aka RyanAir.
Baqa xi hadd rett f`dal-pajjiz !
Is there anybody just left on this island ?
Millions in compensation for the chosen FEW.
Captains and Cousins, Friends of Friends and Labour supporters and members.
The rest get none….or better got none with GWU aware of the situation created in Konrad’s days and while Clyde Caruana is aware the workers were left in the dark with freezed pay and earning less each year.
Just watch how the new venture will be staffed by “persons of trust” and other unqualified and incompetent MLP cronies.
If the redundant KM employees are to be taken in, do they STILL keep the redundany payoffs? Who cares, MLP has a never ending source of our cash!
I give it a couple of years- after a political lacky chairman is installed and more political interference takes it’s usual effect- before it becomes another “Air Malta” millstone round the taxpayers’ necks.
Another disasater for a corrupt administration
Another disaster for a corrupt administration
This report should not go by unnoticed
All those involved should be punished!
Those who do not work in the interest of the tax payers and it is obvious that they wanted to pig out. They are traitors and should be held accountable. We all hope that the courts move in the right direction in the interest of its citizens.
Traitors and gold diggers!!!
Dear Prime Minister nothing to worry about here! The pilots will surely vote for your party. Their votes are what matters!
Thanks to Joseph Muscat for appointing disgraced Minister Mizzi at the helm of Ministry for Tourism!!!
Pilots will be paid hundreds of thousands from tax payers. Probably re-employed by the new airline. Disgrace
Why has the tax payer to fork out MILLIONS to politically employed people who did their best to screw up a company ?
Which private company had its employees given tax payer money because the company turned turtle?
Hekk trid St John!