‘Airlines must not be treated as a political football’ – Former Air Malta CEO says

Former Air Malta CEO Peter Davies has today warned that airlines “must not be treated as a political football,” and insisted that conversely, airlines must run as independent enterprises.

Davies’s comments come just days after Air Malta chairwoman Maria Micallef insisted that the airline and politicians must pull the same rope – even if this means “holding back.”

In an opinion piece fittingly entitled “Without Profit there’s no future,” the Welshman argued that Air Malta – which is steel reeling from the €16 million loss in the year of its expected breakeven – must recognise that there are “significant competitive and technological forces that are structurally changing the way airlines operate.”

Penned for the Sunday Times of Malta, Davies’s opinion further calls on Air Malta to be commercially independent, and start thinking on long-term sustainability by rethinking its business model.

“The recent Air Malta results show that there is a clear deterioration in performance and deviation of the financial results from that published in the European Commission-approved restructuring plan.”

“A single period of change is insufficient, and that after restructuring, simple maintenance is not enough to produce adequate results to ensure survival and future success,” Davies continued in reference to Air Malta’s registered €16.2 million for 2014.

On Wednesday, Air Malta chairwoman Maria Micallef announced that the airline posted a loss of €16 million for the year ending March 2014, compared to €31 million registered during the financial year ending March 2013.

Now in its fourth year, the European Commission’s €230 million restructuring plan for Air Malta was meant to bring Air Malta’s deficit under control.

Under the restructuring plan mandated by the European Commission, Air Malta has managed to stabilise and reduce its operating losses for two consecutive years after it had halved its workforce.

But amidst increasing competition and the suspension of the Libya route – one of Air Malta’s most profitable routes – the airline’s revenues are under pressure.

Notwithstanding the airline’s financial turbulence, Micallef warned that Air Malta must breakeven on the forthcoming 17 months, as these are the “last chance for long-term survival.”