Malta MedAir to be liquidated along with Air Malta

Tista’ tara dan l-artiklu bil-Malti hawn.

Malta MedAir, a government ‘phantom’ airline company registered in 2018 used in an elaborate accounting exercise to give a false impression that Air Malta was turning a profit, is now expected to be liquidated together with Air Malta, according to the government’s secret plan to create a new national airline later this year.

Sources close to the finance ministry told The Shift that as part of the government’s Plan B, drawn up in anticipation of a negative decision from the European Commission on its request to inject more state aid into the flailing airline, Finance Minister Clyde Caruana has now also decided to axe Malta MedAir, and make all its employees redundant, in order to start a new national airline company from scratch.

According to the detailed plans, which have already been approved by Prime Minister Robert Abela, and which are still being discussed in Brussels, all the assets currently held by Malta MedAir – particularly the Heathrow and Gatwick slots valued at some €50 million- will be ‘acquired’ by the new airline.

Those assets will be used as collateral for the banks and other financial institutions that will be called in to finance the new government venture.

The plan – which will mean redundancy for all Air Malta employees still on the airline’s books by the time of its dissolution – will take into consideration some ‘important’ Air Malta employees, mostly those close to the ruling Labour Party. These employees are expected to be ‘recruited’ by the new national airline company where they will assume its top managerial posts, although on less lucrative contracts than those currently being paid by Air Malta.

After refusing to rule out the possibility of dissolving Air Malta, Finance Minister Clyde Caruana yesterday surprisingly said that “all is going according to plan” at the national airline.

However, government sources told The Shift that Caruana’s declarations are “very far from the truth” and are only intended to give a false impression, mostly to employees, to keep their morale high.

“The main reason the minister postponed the cut-off date for Air Malta employees to be transferred onto the government’s books, which was postponed from August to December, is to provide for a smoother transition into his already-devised secret plan,” the sources said.

They also confirmed that a decision has not yet been taken on the date of Air Malta’s dissolution, although that will most likely take place sometime this autumn. The government is planning to, politically, ‘blame’ the European Commission for the ‘forced’ decision.

A few weeks ago, The Shift had exclusively revealed details of the government’s Plan B for Air Malta.

The plan will be set in motion in the highly probable and increasing likely scenario that Brussels turns down the government’s request to inject an additional €290 million into Air Malta.

According to the plan, which the government is keeping under wraps – leaving all employees and their representatives completely in the dark – Air Malta will be dismantled and a new national airline company will be set up in its place.

The new company will take control of all Air Malta’s few remaining assets, except for its employees, and will be operating a slimmer schedule than that at present. All its ground handling, engineering and other needs will be farmed out to private entities.

The new company will recruit new staff with a much lower headcount than that at Air Malta, and with much lower salaries, which will be based on those being paid by low-cost airlines operating out of Malta.

Minister Caruana has refused to answer The Shift’s questions about Plan B.

Air Malta has been in serious financial difficulty for several years, even though disgraced minister Konrad Mizzi had announced that the airline had turned a profit in 2018 – the last time the company published its annual accounts. That ‘profit’ was made possible thanks to a creative accounting exercise that  Minister Caruana has now admitted to.

In 2012, the EU had already allowed the government to pump €130 million in state aid into Air Malta on the condition that it was to have restructured its operations by 2015. But while the airline had started implementing the programme, it was derailed in its last two years mostly because of mismanagement by the company’s top officials and political interventions.

Minister Caruana’s Plan B is almost a copy and paste of what transpired at Alitalia a few years ago, when the Italian government liquidated its legacy carrier Alitalia and in its stead created ITA – Italia Trasporto Aereo S.p.A.