Crunch time for Air Malta

The path has now been cleared for the new business plan to take off

25 August 2016, 8:39am
Cartoon by Mikiel Galea
Cartoon by Mikiel Galea
In many ways this is a moment of truth for the national airline. Air Malta has now almost concluded talks with all unions concerning the effects of the partial acquisition of the airline by Alitalia. Fears of industrial action appear (momentarily, at least) to have fizzled out, with the only outstanding issues now involving engineers and other non-unionised workers. Neither sector is expected to pose a problem, which suggests that the path has now been cleared for the new business plan to take off.

But while issues involving job conditions and workers’ rights seem to have been resolved, the plan itself remains rather unclear. The government signed a memorandum of understanding with Alitalia back in April, in a deal that will see the Italian airline acquire 49% of Air Malta’s shares. Alitalia is itself 49% owned by Abu Dhabi-based airline Etihad Airways. The deal is expected to see Air Malta benefit from a €400 million investment at Alitalia, as well as from its vast network and airport slots. 

Tourism Minister Edward Zammit Lewis has also said that the deal will allow the airline to cut its ticket prices, while predicting a host of advantages for the consumer. 

However, it will also see the government absorb Air Malta’s full €66 million in debt and liabilities, as well as fork out some €6 million on a voluntary early retirement scheme for pilots and cabin crew.

That, however, is roughly the extent of the information that has so far been forthcoming. And the resulting dearth of reliable information has (as always) opened the floodgates to speculation.

So far, much of this has concerned the unspoken ‘small print’ of a plan which from the outset was (understandably) aimed at streamlining the airline’s operations, to make it more competitive and efficient. Implicit in this direction is the prospect of large-scale lay-offs and early retirement schemes, as well as a reduction in flight destinations… both of which would have considerable impact on the service, not to mention serious political ramifications.

From this perspective, it is reasonable to ask how Air Malta could provide assurances that it would retain GWU-represented workers, when the finer details of the acquisition itself have yet to be finalised. The government, it will be remembered, is negotiating simultaneously on two fronts. Both negotiations will be impacted by the other: it is even rumoured that Alitalia might be holding back until certain conditions are met. If so, any agreements with unions, at this stage, would be premature.

Another possible reason for the delay – according to reliable sources, it must be said – is that the government is keen to prolong the negotiations until after the elections, in order to mitigate any political fall-out from such conditions. Either way, the government’s silence on the issue is itself contributing to an aura of uncertainty that makes such speculation inevitable. Given how much of the economy relies on the direction taken by Air Malta, it is entirely understandable that the public would demand answers.

The Malta Hotels and Restaurants’ Association, for instance, has expressed concern about press reports that the new business plan for Air Malta will see the national airline slash one third of its European routes, while introducing new flights to Northern Africa and the Middle East, including Tripoli, Tunis, Casablanca, and Jeddah.

“This strategy confirms Alitalia’s plan to use Air Malta as a feeder airline to the already established networks operated by Etihad and the Italian carrier,” The Times report claimed.

Zammit Lewis was quick to deny the allegations, arguing that “the report was written so as to create uncertainty for the airline at a crucial moment during negotiations, and to destabilize the tourism industry during a time of unprecedented success.”

This is well and good, but the fact remains that neither Zammit Lewis nor his government has so far explained exactly what operational changes we are to expect after the merger. 

Admittedly there are valid reasons to withhold at least some information at this stage – commercial sensitivity, though arguably over-used as a pretext, is clearly an issue in this scenario. But the Labour Party’s electoral expedience should certainly not be an excuse to keep people in the dark. Otherwise, the entire country would end up shouldering inefficiencies, merely for the political benefit of the party in government.

In addition, there is also an urgent need for frank, open discussion about the future of Air Malta. Whatever concessions are made, it is of critical importance that Malta remains well-connected (especially to Europe, whence so much of our tourism originates), and that the possibility of extending flights to North Africa and the Middle East does not come at the expense of affordable accessibility to Europe.

As regards industrial issues, one can understand arguments that Air Malta has been abused in the past to bolster employment. This however does not justify the mistreatment of workers because of past mistakes by successive administrations. If these are to pay any price, they must be adequately compensated. 

Some form of downsizing is however inevitable – there can be no gain without pain. It would therefore be much wiser to give clear indications of exactly how much pain Air Malta is to experience, in return for how much gain.