Air Malta fleet renewal plan will save €8.2 million per year

The plan will see the same number of passengers carried by the airline while making its fleet utilization more efficient

Air Malta’s fleet renewal plan will save the airline €41 million over the next five years.

This emerges from workings that were presented to the Malta Hotels and Restaurants Association (MHRA) by Air Malta, which showed how its fleet renewal plan will save the airline €8.2 million per year while flying the same number of passengers.

“Airplane utilisation is a key performance indicator in the industry. Since airplanes are expensive to lease, the more they are used, the higher the return. It does not make sense to leave such expensive assets idle in winter for more than half of the time,” said Chief Executive Officer Philip Micallef.

“An annual saving of €8.2 million is the single most significant change that could help the airline break even. Many contracts have already been renegotiated, making this a key step of this important process,” he said.

Air Malta’s competitors excel in fleet utilization, with EasyJet and Ryanair flying each of their aircraft between 15 and 16 hours at peak, compared to Air Malta, which flies its aircraft for only 12 hours per day at peak in August.

Air Malta’s new plan is to raise peak flight utilization to 14 hours per day per aircraft, while continuing to fly the same number of passengers, and potentially even more. This does not jeopardize summer’s peak traffic because additional aircraft can be leased for a month in August if the normal fleet does not cope with the added capacity.

“Today we have a fleet that caters generously for the summer period but we are losing all our profits in winter when we do not need such a large fleet. We urgently need to change the model and create an optimal fleet that covers most of the year, with potential to add capacity as necessary. This will save money without negatively impacting any other aspects of the operation, except that everyone at Air Malta has to work more efficiently,” said Chief Financial Officer Mr. Klaus Gossler.

“If we do not implement this change as soon as possible, Air Malta will not break even and make the desired turnaround expected so eagerly by the Maltese,” he added.

After being briefed by the senior management and directors of Air Malta about the restructuring plans the MHRA  (The Malta Hotels and Restaurants Association) said that it agrees that improved productivity and efficiency at Airmalta is critical for its survival, and the continued success of the tourism sector, and the well-being of the economy as a whole.

"We continue to support fully the national airline given its importance to the tourism industry and the economy as a whole, and we hope the plans announced by Airmalta are realised," the association said in a statement.

“What however remains critical, at a strategic level, is a change in the business model in the way Airmalta is owned to ensure that all these efforts will ultimately ensure further sustainable growth and improved competitiveness,” it added.

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