Air Malta employees offered 19% pay increase for higher productivity

The government has offered all Air Malta employees a 19.26% salary increase over five years in exchange for greater productivity and flexibility, Tourism Minister Konrad Mizzi said today.

The increase will raise the national airline’s payroll by €16 million.

“We are guaranteeing jobs for the employees, a better take-home pay and are offering them to tag their take-home pay to a certain year,” Mizzi told reporters. “We will be increasing salaries by 5% next year, 1.5% the year after and so on, amounting to 19% in the next five years.”

Flight hours will increase and cabin crew will be allocated at a ratio of one to every 50 passengers and not according to the aircraft model. Rosters are to be made more flexible, requiring more flight hours on behalf of the crew.

Mizzi faced a storm of protest after he threatened to close down the national airline and reopen it with new staff in response to a breakdown in negotiations with unions over company restructuring.

“If the employees and the unions do not understand that they need to work with the company and the government while we implement changes to make the airline profitable, the government might have no other option but to close the company down completely and re-open with new staff," he told MaltaToday on Saturday.

“We believe there is a future for the airline but it needs to change,” Mizzi said. “It needs to survive as a business going forward.”

The only way for the airline to grow and not end up like CyprusAir was to increase the fleet, routes and revenue.

He pointed to the recent launch of the Go Light product and said the airline would be changing the catering service in January, to be followed by further improvements to business class.

“Revenue doesn’t come by itself and to become cash flow positive and make good for fuel and salaries, certain adjustments were needed,” Mizzi said. “We’ve proposed something which is fair and achievable.”

To cover the €16 million pay increase, the company’s revenue will have to increase by €100 million.

“If we offer more and do not have the productivity increases we need, the company will become insolvent and the government will not be allowed to intervene,” Mizzi said.

“We do not want this to happen.”

Mizzi was characteristically upbeat about the chances of success, saying he was “positive that with the changes, Air Malta will be successful. I’m sure that common sense will prevail.”

Agreement has already been reached with the GWU on the hiving off of ground operations, which include check-in, baggage handling and cargo handling staff.

These workers are to be transferred on their current conditions to a state-owned company which will be competing to win more business, Mizzi said, promising to give more details on this in the coming days.

He urged cooperation to avoid a crisis.

“The company has a future, but we need everybody on the same side. We don’t want a situation like Sabina, Swissair and many other state owned companies.”

Mizzi said he anticipated that the airline’s financial reports will be published around November this year. Unions had been shown the financial situation as it stands at the moment.

Asked by reporters then the cut-off date for a deal to be reached was, he said the aim was to sign a five-year collective agreement in January.

“Some unions are still contesting the wage offers. As a next step I suggested they have a meeting with payroll officials to see, employee by employee, how their wage will increase over the years,” Mizzi said. “But on the financial front, we have no leeway.”

President emeritus George Abela, who acted as a go-between in the talks with the union, said that he had met union representatives and the Air Malta council this morning for an open-book overview of the airline’s financial position.

“We don’t have a stalemate with the unions, let me be clear. There was a need for everyone to see the broader picture of the company’s financial position and hear the way forward for the company.”

“Nobody lost their job, despite the inefficiencies and despite the increase of aircraft there will be the same crews, his shows how many inefficiencies there were,” Abela said.

“This is a collective national effort...everyone must lend a hand, including you,” he said appealing to the press. ”We cannot look at this company in a partisan manner. In fact, the minister insisted that we get the opposition on board, because it is the best guarantee for a good outcome.”

The unions were aware that on 1 January next year, a new collective agreement must be agreed on.

Air Malta chairman Charles Mangion said that more aircraft would need to be leased to provide the revenue needed to make the strategy work.

“The Board of directors has been given a big responsibility to increase revenue by €100 million,” Mizzi said.

Threat to close down airline “not illegal”

Mizzi denied accusations made by opposition leader-in-waiting Adrian Delia, that the take-it-or-leave-it offer did not respect the law. “Delia is probably not informed, because the employees will be transferred according to European directives,” he said.

The company had two options, he said. Either cut employee numbers or lower wages, but in order to increase revenue it had to scale up the organisation.

“The months of work are showing fruit,” he said, “but to add another airplane and become more profitable we must keep the same crew numbers.”

And although this would mean more flying hours for pilots, this would still compare well with industry standards, he said.

“Delia must not have understood. If the changes don’t happen there will be more costs than income, creditors will not be paid and the company will become insolvent. As a responsible government, we set up another company to avoid this.”