Air Malta halves operating losses, annual losses down to €30.9 million

Air Malta has announced that it has halved its operating losses from €30 million to €13.7 million in March 2013, and has registered an operating profit of €6.3 million in the first six months of the current financial year.

Total losses before taxation, including €17.2 million of restructuring and financing costs, were of €30.9 million, down from €40.1 million in 2012 and €78.3 million in 2011.

Airline CEO Peter Davies said that during the last financial year which ended in March, Air Malta achieved "encouraging results" but insisted that it would not rest on its laurels and will strive to achieve better results.

"We need stamina to achieve further success in the future," Davies said, pointing out the progress registered in a number of sectors, including a higher passenger load factor, an improvement in its flight on-time performance and a significant increase in revenue.

Air Malta chairman Ray Fenech denied the company was looking at private investment and noted that he will commence talks with Davies over the renewal of his contract in the coming weeks.

Davies's contract comes to an end in March 2014. He joined Air Malta in 2011 on a €500,000 salary, with a brief to turn the airline into a profit-making company. Davies's mission is to bring profitability to Air Malta by 2016, which will be accompanied by a massive downsizing of 500 employees, two fewer aircraft, new work practices, renegotiated third-party contracts and the loss of some profitable routes. The company has received some €230 million in state aid under European Commission rules.

During this financial year the airline reported an operating loss from airline operations before restructuring and finance costs of €13.7 million (2012: €29.7m, 2011: €34m). This result is €1 million better than that budgeted in the Restructuring Plan and represents an improvement of €16 million over last year. The total loss for the year after restructuring and finance costs was €31.2 million (2012: €38.4m, 2011: €88.9m).

The revenue from airline operations increased by €13 million to €221 million (2012: €210.5m, 2011: €205.7m). This were driven by a constant improvement in revenue generation initiatives that include ancillary revenues.

Available Seat Kilometres (ASKs millions) were down 7% to 3,483 from 3,738. This was in line with the compensatory measures of the Restructuring Plan approved by the European Commission. Despite this decreased seat capacity, Air Malta carried 1.74 million passengers, a minimal drop of 2% from the 1.78 million passengers registered last year. This positive result was achieved through an increase in passenger load factor of +1.7% to 76.5% (2012: 74.8%, 2011: 68.5%).

On time performance (OTP), which is being reported for the first time during the airline's annual report, has improved by 3.8% to 80.1%. (2012: 76.3%, 2011: 76.7%). This operational measure indicates the percentage of flights that have departed within 15 minutes of their scheduled time of departure. This is an industry standard measurement of on-time performance of an airline and is one of the key performance indicators of the industry. Over the last year Air Malta has launched a business process re-engineering program of projects to improve its OTP.

Fuel was Air Malta's largest cost item amounting to 28% of the airline's revenue. The airline said that fuel and currency hedging strategies adopted by the company were leaving the desired effect in view that the risk of higher fuel costs is being mitigated. "Through these initiatives Air Malta has successfully converted what was a substantial cost penalty against our competition to being in-line and at times better than direct competition," CEO Peter Davies said.

During the six month period that follow these audited financial statements being announced today, Air Malta increased its revenue by €9.6million (+7.2%) over the previous year. During this period the airline registered an operating profit before restructuring and other related costs of €6.25million (HY2012: 0.41m). The profit for the period, after restructuring and finance costs, was €2.9million (HY2012: €5.6m loss).

During this period Air Malta registered an increase in passengers of 5% to 1.11 million (HY2012: 1.06m) and a decrease in load factor of 1.7% to 76.8% (HY2012: 78.5%). Air Malta also improved its OTP by 6% to 84.5% (Apr-Sep 2012: 78.5%).

This year Air Malta invested €3.5 million in new ground Services equipment, restarted daily flights to Tripoli and inaugurated flights to Benghazi. It renegotiated the contractual agreement with SITA, signed Collective Agreements with the Union of Engineers and ALPA, launched a new in-flight magazine Il-Bizzilla and appointed Joseph Calleja as its brand ambassador. It also sold Holiday Malta and Flyaway Tours to continue meeting the requirements of the restructuring plan.