Exclusive: Sonny Portelli warns Air Malta pilots of the end of the road for airline

Air Malta chairman Sonny Portelli has reportedly told the national airline’s pilots that unless government intervened financially to support the airline, the company be unable to operate by the end of 2010.

The stark warning was delivered to a shocked audience of pilots in an unguarded comment that revealed the extent of financial turbulence inside the national airline. The meeting was held at the Intercontinental Hotel in St Julian’s.

Portelli, who was formerly the chairman at Go plc and now also holds the chairmanship of the MCESD, also said that the company was now working at a loss, but stopped short of explaining why Air Malta will hang on to its fleet of 12 planes – considered ‘inconceivable’ by critics – or whether it will be dropping some of its 36 destinations.

Portelli was reported saying that the European Union’s strict rules on government subvention to airlines precluded any direct help to Air Malta, but the government was working to circumvent this problem. He also hinted that Air Malta would be seeking loans from foreign financial institutions.

Portelli was asked by one pilot why Ryanair, the Irish low-fares giant which has set up a base in Malta, could receive direct funds from government and great financial advantages at Malta International Airport, but not Air Malta. Ryanair benefits from discounted landing fees thanks to government subsidies that form part of the route development support scheme: a EU-sanctioned system of supporting underserved routes, which airlines like Ryanair thrive upon. In the past, Air Malta chief executive Joe Cappello said Malta is already dependent on Ryanair.

Pilots who spoke to MaltaToday also said the last batch of Air Malta trainee pilots had been given definite contracts that will expire by the end of 2010. “That’s a sign of how bad the situation is,” one pilot said.

Another pilot spoke of the fact that many of Air Malta’s assets – such as the Holiday Inn and Selmun hotels and the Hal-Ferh holiday complex – had now been sold and the airline was now in a loss-making situation for a long time.

Air Malta pilots already accepted salary cuts back in 2004, which Air Malta says is money paid back to the company to aid its restructuring. But now they say the situation they face are “bad policy decisions that have led to this dire situation.”

“We are always being asked to make sacrifices and yet the company still continues with outsourcing of many of its operations to local companies. We have to compete with Ryanair which receives government subsidies, and then listen to the argument that Air Malta cannot receive government funding because of EU regulations,” was one pilot’s complaint.