[WATCH] Muscat says no deal yet for Air Malta with Etihad

Prime Minister announces €33 million investment by SR Technics at Safi Aviation Park

PM on Air Malta - Etihad talks • PM visits works at Safi Aviation Park

Prime Minister Joseph Muscat has told reporters that talks between Air Malta and Etihad are still ongoing and denied reports in The Times today that a deal had been clinched for a strategic alliance between the two airlines.

"No deal has been wrapped up, but talks are ongoing. Government will announce any deal as soon as it is completed," Muscat said during the announcement of a €33 million investment by SR Technics at the Safi Aviation Park. The investment will create 132 new jobs.

Muscat also stressed that the government was still searching for the best strategic partner to revamp the ailing national airline, and he explained that any memorandum of understanding signed would be the basis of talks and further negotiations to ensure the best possible deal and conditions for employees.

The national airline is tring to sell a considerable stake to Etihad Airways, and talks with unions over the future of the workforce are expected in the near future.

News of the talks between the two airlines was first broken by MaltaToday in November, but the suggestions were skirted by tourism minister Edward Zammit Lewis, who on various occasions insisted that the government was still trying to identify a “strategic partner” for the company, and that he could not reveal the identity of those in talks with the government due to commercial sensitivity.

“Negotiations between the government and the UAE airline have concluded and an official agreement is now imminent,” a senior government official told The Times of Malta.

The official added that although the size of the stake to be bought by Etihad was unknown, the agreement would be divided in two phases, starting with a preliminary agreement (the MOU), to be signed ahead of a formal one once unions give it a go ahead.

Unions have often voiced their concerns about the imminent deal, often expressing concerns about the fate of the company’s employees and insisting that “the airline remains Maltese”.

Under European Commission rules, Etihad can buy a maximum of 49.9% of the airline’s shares given that Air Malta will need to remain an EU flag carrier to operate under a European licence.

Air Malta launched a five-year restructuring plan that the previous government had agreed with the European Commission in 2012 in return for its approval of around €130 million in state aid. Audited figures announced during the October meeting show that the airline posted a loss of €16.4 million for the year ending March 2015 and is set to reduce its losses to €4 million by 2016.

Over the past five years, the carrier was forced to trim its staff, reduce its number of operating planes, and cut capacity. The plan should have seen the company return to profitability this year but it has fallen way short of its restructuring targets.

€33 million investment announced

Muscat announced that the government was investing an additional €33 million in the local aviation maintenance sector.

Flanked by economy minister Chris Cardona, Muscat visited ongoing works at the Safi aviation park to view the infrastructural improvements and project aimed at strengthening the sector and making Malta more attractive to investors in the sector.

MIP chief executive Mario Galea said that works on the park had started in October 2014 and they were now in their final phases with work expected to be completed by June.

Muscat added that the investment would also see some 132 new jobs, and that the government would also be working closely with the educational sector to address the shortage of skills and support growth in the sectors.

He added that the investment would add a total of 36,000 sq m of hangars and that they would be partially funded by the EU. The hangars will allow airlines to maintain and construct aeroplanes of various sizes, and MIP will also invest in the widening if runways to accommodate these planes.

“The investment will also see the creation of a cosmetic hangar, that  will cost some €16.5 million and be responsible for services like painting among others,” Muscat said adding that this would be functional by October.

He added that one of the drawbacks for airline companies was that the lack of these facilities locally had meant that aircraft had to be taken abroad, but that now the new service would make the country more attractive.

Muscat added that the government would continue to push aircraft maintenance companies and supporting their development.

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