BOV gave ‘temporary facility’ to Air Malta prior to €52 million emergency aid

Tonio Fenech revealed this detail as he denied reports that Air Malta paid out a tranche of what it owes to Air Malta out of the  €52 million emergency loan that was approved by the European Commission at the beginning of the year.

“What I can say is that Bank of Valletta issued a temporary facility to Air Malta to bridge the gap in receiving the emergency aid,” Fenech told MaltaToday, and added that Air Malta has still not paid off this loan.

Tonio Fenech did not disclose the amount loaned to Air Malta as a “temporary facility” however the news raises further questions about the indebtedness with the bank, who’s chairman Roderick Chalmers has also been appointed to the airline’s board of directors.

The finance minister – who spoke via video conference from Dar Malta in Brussels shortly after attending the EU’s finance minister’s council – said that he expected “common sense” and “responsibility” to prevail as government meets airline workers’ unions at Castille today ahead of a planned protest in Valletta on Friday and a threat by pilots’ to ground Air Malta planes on Saturday.

Prime Minister Lawrence Gonzi is to preside over the meeting at Castille, and all eyes are focused on the presence of the Airline Pilots Association president, Dominic Azzopardi.

Talks will centre on plans by ALPA to ground Air Malta planes after 96% of union members voted in favour of industrial action unless the airline’s restructuring programme does not renegotiate its third-party contracts. ALPA is insisting that before dismissing any pilots, Air Malta must make substantial savings by renegotiating contracts, particularly with Malta International Airport.

The eleventh-hour meeting comes after ALPA gave notice of its industrial action to the Director of Employment and Industrial Relations yesterday  morning.

On Monday, the Association of Airline Engineers announced it had not taken a final decision whether it would participate in a planned demonstration by Air Malta unions, the Forum unions’ federation, and the General Workers Union on Friday.

Additionally, a chorus of industrial leaders said appealed to an end to threats by ALPA to ground aircraft. The Chamber of Commerce said ALPA’s threats were ill-timed, disproportionate and “most irresponsible”. “They must not be short-sighted and resort to the negotiating table in an effort to unblock the situation through reason rather than destruction.” In another statement, the Malta Employers Association (MEA) has stressed that industrial action “should be avoided at all costs.”

In an interview with MaltaToday last Sunday, Dominic Azzopardi claimed that part of the €52 million bailout for Air Malta had been used to pay off debts the airline had with Bank of Valletta, one of the airline’s shareholders.  “I am absolutely certain that a substantial part of the €52 million were used used to pay off certain loans with BOV. And this was when the Ernst & Young report clearly said that a specific loan to the airline should have been extended, rather than paid off,” Azzopardi said.

Azzopardi says that in meetings with the finance minster, Tonio Fenech had “no reaction” to his allegations.

Speculation is now growing that government may use the seminal strike action as an excuse to liquidate Air Malta, pay off the debts and then sell off the company.

“If government wants to liquidate the company we’re not going to hold it from doing so. If government wants to talk to us and mend the situation, then it means it wants to talk. If government liquidates Air Malta, we won’t budge from Castille... government won’t have enough pilots to man a new service,” Azzopardi said.

One of the threats to a new airline service – perhaps privatised – is that only Maltese-registered pilots can fly Air Malta aircraft, and pilots must have a Maltese licence. Azzopardi said that Maltese pilots flying airliners with foreign companies have lost their native licence. “And you can’t have a foreign company providing the service because it would be a strike breaker. The European Cockpit Association is informed with what is happening in Malta and it is expected to make a flight ban if we go ahead with a strike.”

Warnings by the finance ministry that strike action could endanger Air Malta as a whole have been widely interpreted as a prelude to the closure of the airline.

“It doesn’t pass through my head that government could liquidate the company. But that it gives it for free to somebody... yes. If it liquidates the company it will bring the country to its knees. I think finance minister Tonio Fenech is responsible enough. We’re a chain – if we go down, others go down at Air Malta. We want to save Air Malta.”

Meanwehile, finance Minister Tonio Fenech held a video conference from Brussels yesterday afternoon with top Air Malta officials.

Accompanied by Permanent Representative to the EU Richard Cachia Caruana, Fenech was in video conference with Castille where Air Malta chairman Louis Farrugia, CEO Peter Davies and senior management officials reportedly discussed the latest developments at the airline, ahead of the talks today..