Muscat will consider alternatives if Alitalia talks are not favourable for Air Malta

Prime Minister on Air Malta talks:  “There are no ties… if a better offer comes through or if negotiations are not to our advantage, we will go for another alternative.”

File photo: Joseph Muscat (left) in a meeting with the MHRA
File photo: Joseph Muscat (left) in a meeting with the MHRA

Prime Minister Joseph Muscat has said his government will consider other alternatives if negotiations with Alitalia for the sale of a 49% stake in Air Malta, are not advantageous to the national airline.

He was responding to concerns from the Malta Hotels and Restaurants Association, whose president Tony Zahra said was worried that the national airline will not be carrying the most passengers in the coming year.

The MHRA was presenting Muscat with its pre-budget proposals. “This is our national airline,” Zahra said. “It is what we have and we must safeguard it.”

Muscat replied that he would seek other options if discussions with Alitalia, which is 49% owned by the Abu Dhabi airline Etihad, fail.

“There are no ties… if a better offer comes through or if negotiations are not to our advantage, we will go for another alternative,” Muscat said.

Five months have elapsed since the government announced Alitalia would acquire a 49% stake in Air Malta and, while questions remain about what stage the negotiations have reached, Tourism Minister Edward Zammit Lewis is adamant that the slow pace of talks is “a cautionary measure” to ensure the best deal for the Maltese airline.

“Privatisation of airlines abroad took years… although we have no intention of prolonging the process, and we do want to close in the coming months, we don’t want to hasten the negotiations. This situation requires one to be cautious,” Zammit Lewis told MaltaToday last week.

 “We are not a government that decides on selling a bank overnight and wake up one morning and announce the privatisation.”

Air Malta has been undergoing a restructuring process costing some €230 million ever since it was given the green light for state aid under strict European Commission rules. 

The acquisition comes at an important juncture for Air Malta, where low cost giant Ryanair is close to taking the majority market share of the incoming passenger market to Malta.

The Nationalist Party has in the past proposed the selling of the airline’s shares, later proposing that local investors should contribute to improve the airline’s situation. The minister did not rule out the latter option.

Expert advice by legal firm Camilleri Preziosi showed that Air Malta could not be floated on the stock exchange due to its financial predicament. Its financial situation means that Air Malta cannot even qualify for a listing of its shares.