Malta and Brussels discussing Air Malta subsidies

This confirms reports by MaltaToday last week that Air Malta chairman Sonny Portelli told the airline’s pilots the company will be unable to operate in 2010 unless government intervened to financially support the airline.

The company was reportedly working at a loss, and has recently decided to operate with one carrier less from the coming winter, possibly resulting in less routes. This is another attempt by Air Malta to cut costs, after experiencing a set back of €31 million last year.

The Times said the Finance Ministry did not want to say whether talks would lead to direct state aid. This would require a go-ahead by the EU, unless the government decides to recapitalise. The same newspaper adds that the European Commission had been discussing the airline’s prospects for months, involving "top officials from the government and the airline.”

MaltaToday reported last Saturday the airline refused claims that Portelli annnounced the airlines need for “government subventions”, but agreed that government was looking for ways to get permission from the EU to give subdidies to Air Malta.

Portelli had said the EU’s strict subvention rules to airlines are a means of forestalling direct help to Air Malta, but the government was finding a way to bypass the problem. Portelli hinted the company would be looking out for loans from foreign financial institutions.

Air Malta also quoted Portelli saying the selling of the company’s assets, such as Hal Ferh, The Crown Plaza Hotel and eventually the Selmun Palace hotel, “was not, in any way, linked to the airline’s current financial situation, but to a strategy… to streamline its activities.”

Pilots who spoke to MaltaToday said the company cut their salaries in 2004, which they accepted. However, the situation they are facing now is a result of “bad policy decisions that have led to this dire situation.”