Air Malta’s workforce to be halved in last-chance restructuring

Finance Minister Clyde Caruana announces Air Malta’s workforce will be halved under plans to make the airline financially viable as the government awaits final amount of state aid Brussels will allow

Finance Minister Clyde Caruana (James Bianchi/MaltaToday)
Finance Minister Clyde Caruana (James Bianchi/MaltaToday)
📹 LIVE | Il-Ministru Clyde Caruana jindirizza konferenza tal-aħbarijiet dwar il-futur tal-Air Malta.

📹 LIVE | Il-Ministru Clyde Caruana jindirizza konferenza tal-aħbarijiet dwar il-futur tal-Air Malta. finanzi

Posted by MaltaGov on Friday, January 14, 2022

Air Malta’s workforce will be halved under plans to make the airline financially viable as government still waits the final amount of state aid Brussels will allow.

The airline’s current complement of around 900 will reduce to around 420 with workers being offered alternative employment with government. This measure will save the airline some €15 million per year.

The plan also calls for new collective agreements to include more worker flexibility to allow the airline to fly between different airports that do not include Malta. These collective agreements have to be concluded by June.

Details of the restructuring plan were announced on Friday afternoon by Finance Minister Clyde Caruana and Air Malta executive chairman David Curmi.

Caruana said the cost-cutting plan that will see the airline ridding itself of ground handling operations, was independent of the amount of state aid the European Commission will allow.

Brussels has not yet pronounced itself on the amount of state aid the government will be able to pump into the airline. A decision on this will be communicated in the coming weeks.

Caruana said he is not expecting the approved amount to be big but insisted the size is irrelevant to the restructuring plans.

Restructuring intends to give the airline “a fighting chance” to survive with redundancies expected to be completed by the first half of this year, Caruana said.

“We are taking these decisions now irrespective of the election because we have to be honest with workers,” Caruana said, adding the decisions make business sense.

He said the European Commission’s preferred option was to shut down Air Malta and start anew, something the government was not willing to do.

“The commission made it clear it did not trust government to implement reforms because of past pledges over a span of years that were never adhered to,” Caruana said, adding political decisions in the past replaced common sense.

Job cuts

The bulk of job cuts concern ground handling operations, which currently account for 300 workers. Another 110 workers to be made redundant will come from cabin crew and administration.

A voluntary transfer scheme will initially be offered to 407 Air Malta employees who work as cabin crew and administration. Of these, 110 will be given alternative employment by the end of March.

No early retirement schemes will be offered.

The ground handling operations will be wound down by the first half of the year.

Network rationalised

Air Malta’s network already started being rationalised since Curmi took charge of the airline.

Plans crafted under previous minister Konrad Mizzi for Air Malta to fly to far-flung airports in the US and Mumbai, India have been ditched.

Two Airbus aircraft that were going to be bought to service these long-haul flights will now be replaced by three planes for short-haul flights.

Meeting with unions

Earlier, Caruana met the five unions represented at the airline to lay out the plans. He said unions were receptive and talks will continue over the coming weeks.

“There is a tough road ahead and the coming days and weeks are crucial if the airline is to survive. This is the last chance to survive because the airline has no further assets to sell as it did in the past,” Caruana said, adding that more flexibility was needed.

Budget allocated €65 million for restructuring

MaltaToday asked Caruana about a line item under the capital expenditure vote of the Finance Ministry in Budget 2022, which indicated the amount of €65 million as ‘national airline restructuring assistance’ and whether this reflected the expected assistance Brussels will allow.

 

Caruana said the budget had to include an estimate but the commission's decision had not yet been communicated.