Air Malta expected to announce small profit, first in 16 years

Tourism minister Konrad Mizzi is expected to add a new feather in his cap, when national airline Air Malta reveals a tiny operational profit for 2018, the first in 16 years.

Sources said the airline had managed to climb slightly into the black with a €200,000 operational profit, although the figure could be lower due to other receivables.

But it will be seen as a coup for the Labour minister, who was recently buoyed by a MaltaToday survey suggesting he is the second most preferred Cabinet minister by Labour respondents. He is now said to be exploring a possible bid for the party leadership should Joseph Muscat resign at the end of his second tenure.

Although the operational profit will be further chipped away by extraordinary items, the airline will be posting an increase in overall revenues after having opened new routes.

Air Malta’s planes are also flying for more hours, an important factor since previous administrations had trouble in convincing the airline union to fly for longer. This has enabled the airline to spread its fixed costs across more flights.

The airline will also register clear productivity gains after having hammered out new collective agreements with pilots, increased load factors, and upgraded its fleet to replace older planes.

News of Air Malta’s improved performance offers some relief to the national airline, when in 2017 it appeared pilots and Air Malta management were set for collision over wage increases being linked to longer flying hours. Mizzi had just assumed his new role as tourism minister when he replaced the entire board of directors and company chairman, and reintroduced flights that were cut from the airline’s roster in a bid to consolidate profit-making routes only.

The airline underwent an intensive restructuring process since being on the brink of bankruptcy in 2010, when government stepped in with State aid that had to be cleared by Brussels.

The restructuring process, which involved downsizing the airline and cutting some of its routes, was supposed to turn the airline back to black within five years. The airline failed to do so. But in June 2017, the airline added new routes, increased the number of aircraft in operation and negotiated collective agreements with its workers. It also cut certain costs, such as free on-board meals.