Air Malta threat to wind down as pilots resist COVID-19 salary cuts

Air Malta’s pilots are holding out in tough negotiations with management, despite an imminent threat to terminate jobs and break up the airline.

With the national airline’s fleet grounded due to the COVID-19 pandemic, ALPA is the last union to resist a radical pay cut of their take-home pay to just €1,200 a month.

But MaltaToday was told by airline sources that the government could consent to break up Air Malta and transfer operations to a new company.

The government has hived off airport slots and intellectual property on the Air Malta brand, in a fall-back plan hatched by former tourism minister Konrad Mizzi to relaunch the company and free it from handsome collective agreements with unions.

Time could be running out for Air Malta, not least due to Ryanair cuts in staff as the airline prepares to mount a price offensive when Malta International Airport re-opens in July.

The airline will only retain staff if there is agreement on salaries and flying hours; management accuses ALPA of flying less hours than European counterparts as well as enjoying compensation for denied leave. 

But it was the same Mizzi who signed an agreement with pilots guaranteeing them a job at the same take-home pay they are earning now. That 2018 agreement has now become a major sticking point in discussions between the pilots and the government over redundancies. It gives pilots a guarantee of a job in Malta, valid until the collective agreement expires in 2023 and another is signed.

Air Malta wants to slash pilots’ salaries to €1,200 while it is grounded, or sack most of them amid the airline crisis brought about by COVID-19. First officers’ salaries range from €50,000 to €80,000, while that of captains stands at between €90,000 and €140,000.

READ ALSO: Air Malta signs collective agreement with cabin crew union

Last week the Union of Cabin Crew accepted reduced salaries after Air Malta took the unprecedented step of making 108 pilots and 139 cabin crew redundant. The UCC deal has enabled Air Malta to retain the equivalent of 125 full-time cabin crew workers, with reduced hours and salaries. Their job guarantee will however expire in 2022.

“Ryanair is shedding jobs and once airports re-open, their pricing is going to be aggressive. Air Malta will be facing a tourist season with a high labour cost and the risk of being priced out of the market. We cannot afford not to be ship-shape for the season,” an airline source told MaltaToday.

But Air Malta pilots are still insisting on their demands for a handsome early retirement package for pilots over 50. The same demand was made in 2019, when ALPA demanded a guarantee that an early retirement scheme that pays them €700,000 at retirement at age 55, will be retained should the airline fail.

Pilots already have an early retirement scheme for those over 55 with 25 years’ service, which pays them two-thirds of their basic salary, plus 0.1% of basic salary per month until reaching retirement age. At an average €80,000 salary, that would guarantee them an annual salary of €53,000 until retirement.

ALPA represents some 134 pilots at the national airline.

Also yesterday, redundancies started at Ryanair’s Malta Air base in Malta, with COVID-19 restrictions now forcing the airline to lay off workers. 

Malta Air informed employees it would propose a 10% salary cut for the next five years due to projections showing the company being unable to recover in the short-term. 

Sources said around 20 pilots and 40 cabin crew will be made redundant from the full complement of 179 pilots and cabin crew. 

In a memo sent to employees by Malta Air’s human resources department on Friday, workers were told of “unavoidable need for redundancies” due to the COVID-19 crisis. 

Employees had already received a similar memo two days earlier on Wednesday 27 May. 

“We regret to inform you that due to the COVID-19 crisis and the failure of our recent discussions with the ERCs to agree reasonable pay cuts, we need to make significant cost-reductions and implement urgent restructuring to protect the viability of our Maltese base,” Malta Air told employees made redundant. 

Terminations will come into effect from 30 June, with a one-month notice that will be paid in full settlement of claims. 

At the start of May, Ryanair announced plans to return to 40% of normal flight schedules from 1 July, subject to government restrictions being lifted.  Ryanair said it would operate a daily flight schedule of almost 1,000 flights, restoring 90% of its pre-COVID-19 route network. 

Ryanair launched subsidiary airline Malta Air in 2019, operating out of Malta with a fleet of six aircraft that was expected to 10 over three years. The airline aimed to carry 5 million passengers in the first five years of operation. 

The new airline took on the 62 routes Ryanair currently operates out of Malta, as well as registering over 50 other aircraft to Malta’s aircraft register.

Ryanair Holdings plc reported a full year profit of €1 billion compared to €885m in 2018. Most of Ryanair’s fleet was grounded from mid-March by EU Government flight bans and restrictions. These groundings reduced March and full-year traffic by over five million guests and cut 2020 profits by over €40 million.

READ ALSO: Tourism Minister hints at 15 June for reopening of Malta International Airport