Updated | Air Malta makes 108 pilots, 139 cabin crew redundant after unions refuses pay cut

Air Malta has taken the unprecedented step to make 108 pilots from its staff of 134 redundant, after the Airline Pilots Association (ALPA) refused to take a radical pay cut of €1,200 a month due to the coronavirus grounding all flights.

The airline will also make 139 cabin crew on indefinite contracts redundant, and stop 145 cabin crew on fixed-term contracts.

Pilots were refusing to accede to the pay cut, claiming their salaries had already been cut by 30% due to reduced flying hours affecting their performance-based pay. “Reducing our salaries will not solve anything for the airline. Management should be cutting down on third-party commitments... we should discuss airline leases. We want the satisfaction that we can be partners at the same table to discuss the airline’s restructuring if we are to endure wage cuts,” ALPA spokesperson Dominic Azzopardi told MaltaToday last week.

Pilots’ average gross salaries are €140,000 for captains, and €80,000 for first officers. Even without flying, pilots are left with substantial salaries that do not reflect the state of the shuttered airline right now.

The effects of the redundancies will be radical for the airline, due to legal obligations safeguarding pilots’ salaries in generous collective agreements they negotiated in the last years.

Dominic Azzopardi told The Times he was left speechless at the decision. “Employees are the ones who will be bearing the brung of the situation by the looks of it.”

In a statement, Air Malta CEO Clifford Chetcuti said the COVID-19 crisis had cut down operations to a mere two flights per day, as opposed to the scheduled average of 20 daily flights. “But the extraordinary amount of cancellations, and therefore reimbursements, together with the obligation to continue servicing fixed costs, such as aircraft lease payments, have led the company to necessitate mitigation of costs, including payroll costs.”

The airline is currently servicing the country to fly in Maltese citizens stranded abroad, as well as bringing in crucial cargo, essential medical equipment and supplies.

But Chetcuti said neither ALPA nor the UCC had accepted their offers for a €1,200 pay to retain all employees. “As a result, the company regrettably had to announce to its workforce that a number of employees falling under the collective agreement signed with the UCC and ALPA will be made redundant due to the current circumstances and the failure to reach agreement with the same Unions on cost mitigation measures which could have avoided such redundancies.”

Air Malta currently employes 333 employees who fall under the collective agreement signed with the Union of Cabin Crew.  Of these, 188 are on an indefinite term contract, while 145 are on a fixed term contract. Employees on a fixed-term contract have already been notified that their employment will not be extended following the expiry of its current term.

Another 139 cabin crew on an indefinite term contract will be made redundant. 108 pilots will be made redundant.  

“The employees retained will be sufficient for Air Malta to continue operating at current levels which are expected to be the case for a number of months,” Chetcuti said.

He also said Air Malta’s top management had accepted a “significant pay cut” in salaries together with the removal of allowances and perks.

“In the circumstances where the airline’s hands are tied to an almost zero-revenue situation, the company can’t do otherwise to survive through this storm.  The company is disappointed the unions were not considerate and sensitive enough to its very hard financial situation, when the aviation industry is facing the worst crisis in its history. Other European airlines have already made thousands of their employees redundant in the light that this economic crisis will be with us for a good number of months.”

ALPA statement

In a statement, ALPA claimed it had not refused the Air Malta proposals.

“The burden of the current situation must be borne equally by all employees from the very top to the bottom. ALPA is willing to carry its fair share of the burden, after ensuring that the process of meaningful and effective consultation has been duly carried out. Air Malta resorted to informing the DIER about redundancies without effectively exploring other possible avenues and instead presenting ALPA with a ‘fait accompli’. Airlines around the globe held meaningful consultations with their pilot associations which resulted in agreements being reached amicably,” the union said.

ALPA also accused CEO Clifford Chetcutu of not telling the workforce up front about what they said was his €300,000 salary and perks. “His lack of transparency is creating negative undercurrents within the workforce and is raising the ire and suspicion of most. ALPA demands answers as to management’s pay cuts to ensure fairness across the board and insist that management should lead by example.”

ALPA also requested clarity on how Air Malta is honouring other third-party contracts, such as aircraft leasing, and to follow up on ALPA’s proposals intended to cushion the negative impact on all employees’ financial commitments.

“These pilots form the backbone of Air Malta’s operation and deliver high-skill value sets ranging from flying the aircraft to maintaining highly specific administrative and technical jobs and undertaking various high value training programmes. Air Malta’s pilots have trained numerous airline pilots around the globe, whilst ensuring an impeccable safety record.”

Cabin crew dispute

A number of cabin crew employees on definite contracts had previously instructed a lawyer to inform the that they are in partial agreement with the reduced salary, claiming the union was resisting the pay cut because staff on indefinite contracts had better salaries of some €2,600 a month. Definite contract employees were previously paid a €1,500 basic salary, topped up according to the number of hours they worked.

The airline wanted them to utilise their paid vacation carried forward from 2019, and for all 2020; work reduced hours which will reduce their salaries by around 40-80%; and then go on forced unpaid leave, to be called in to work only on an ‘as needed’ basis, being remunerated for hours effectively worked.

But the UCC protested that the Air Malta proposal came as a take-it-or-leave-it offer, and that the airline had prematurely informed a number of employees on definite term contracts that it would not be renewing their contract at end-April, pitting cabin crew members against each other.

The Association of Airline Engineers has accepted a basic salary offer of €1,200 after a vote endorsed by 90% of the union’s members.