Government in talks with airlines to establish 'strategic partnership' with Air Malta

Tourism minister Edward Zammit Lewis has revealed that talks are currently underway between the government and several airlines in an effort to establish a “strategic partnership” and save Air Malta.

Speaking on tonight’s edition of Reporter, which focused on the foundering national carrier, Zammit Lewis remained tight-lipped on the details of the talks, only hinting that the airline would be privately managed but part-owned by the State .

The revelation came after PN deputy leader Mario De Marco, who previously served as tourism minister under the Nationalist administration, reminded him that if Air Malta was not going to be viable by this October, the government would be prohibited from assisting it financially due to EU regulations on state aid.

Unpleasant decisions must be taken, said De Marco. “If we do not, we will not have an Air Malta.”

Ernst and Young had been commissioned to compile a report on Air Malta under the previous administration, said De Marco. The report suggested that the fleet be cut down to 8 he said, adding that the Nationalist government had rejected this proposal as unworkable and counterproductive.

He asked the minister to bind himself to his statement that his proposed reduction of the current fleet of aircraft to would not affect the operational capacity of the airline. “We are renting aircraft to bring the fleet up to 12 planes during peak months,” the minister said, explaining the differences in demand between the Summer and Winter months means that the airline rents aircraft in Summer  to avoid them being unused in Winter.

The question was what other sources of capital could be made available. Zammit Lewis admitted that the government had no choice but to turn the national carrier around by the October deadline “as nobody will want to invest in it after that.”

Tony Zahra, representing the Malta Hotels and Retailers Association on tonight’s programme, said that saving the national airline is of paramount importance. “Cargo and special services are only performed in Malta by Air Malta. If you lose it you lose a lot of your bargaining power with other airlines and the entire economy will feel the ripple effect.”

 “The airline’s business  model used to work in the past but does not today. Before, you had a bilateral agreement with a country’s airlines and this was used to establish profitable prices, but this came to an end with the EU’s policy of open skies.”

The president of the Airline Pilots  Association (ALPA), Dominic Azzopardi, remarked that we seem to be forgetting the history of the company. “It has been making losses for fifteen years but was keeping afloat thanks to its subsidiary businesses. But the airport is now privatised and this is adding costs. The morsel is being divided between ever larger numbers of mouths.”

The troubled national carrier’s plight was not helped by the string of foreign chairmen who “were only interested in doing their three years and making money.”

He announced that the pilots have met with the board and proposed that apart from flying, the company could make money training. Azzopardi pointed out that Air Malta has a training licence which, so far, has only been used to train its own pilots.

De Marco said that it was being rumoured that Air Malta was going to be sold to China, in the same manner as Shanghai Electric had taken over Enemalta. Alitalia had the same problem, but they brought in a number of Italian investors, they did not sell it to foreigners.

 Azzopardi added that if the airline could manage a €10 million increase in profits, it would break even and not need to be sold.
“When I run my family finances, I don’t say ‘If I go bankrupt I will partner up with the neighbours’, I aim to break even. The government was elected on the slogan that it would increase business for Air Malta and if it does it will break even.”

Zahra, too, agreed that selling the national carrier was not a good idea. “Madness is repeating the same thing and expecting different results,” said the hotelier. “We invested €230 million into Air Malta and it is still losing money. Now, running an airline with ten aircraft is not that difficult, but decisions were not taken.” Instead of solving the problems, Zahra said, foreigners were brought in, paid handsomely and the problems are still there.

Zahra and the MHRA suggested a Maltese solution. “We can run the airline and make it work”.

Azzopardi was at pains to point out that the problems with the airline stem from the contracts with its agents and not from the workers. “The workers cannot change the situation,” he said. The minister, however, was of the opinion that the workers have a big part to play in the fate of the airline, saying as much on more than one occasion during the programme.

Zammit Lewis underlined the importance of bipartisan cooperation on Air Malta, urging the opposition to work with him in this regard. He was determined to find a solution to the issue, he said. “I will not be accused of inaction.”