New airline will be different from Air Malta – European Commission

Tista’ taqra dan l-artiklu bil-Malti

Despite attempts by the Maltese government to frame the closure of AirMalta and the creation of a new budget airline as a seamless transition, even possibly retaining the same name and branding, the European Commission told The Shift that the two entities will be different.

Malta’s 50-year-old national carrier – Air Malta – will be completely shut down next March after years of financial mismanagement and a refusal from the Commission to allow more money to be pumped into it over fears of violating EU state aid rules.

At a press conference on Monday, when the closure of the failed AirMalta was announced, the government was keen to position it not as a failure but as a ‘seamless transition’ from AirMalta to another entity which would hopefully retain the same name, branding, and assets.

Reacting to the government’s announcement, made given unsuccessful negotiations with Brussels led by Finance Minister Clyde Caruana, the Commission made it clear that this so far unnamed airline will not be another Air Malta.

“The Commission takes note of the Maltese authorities’ plan to create a new air carrier, which will be different from the existing carrier, Air Malta. We have no further comment on the matter,” a Commission spokesman told The Shift without getting into any specific details.

The Commission also confirmed that it has been in constructive contact with the Maltese authorities over yesterday’s announcement but refrained from making any direct comments.

What will change, and what will happen to Air Malta?

As revealed by The Shift in August 2022, the government was forced to abandon its original plans to inject some €290 million into Air Malta to save it from crash landing due to EU opposition over state aid rules. Air Malta was already given restructuring aid in 2012 to keep it from bankruptcy.

Between 2012 and 2014, the company reached its goals, tied to a five-year restructuring plan, but shortly after Labour won its second mandate, the company started registering massive losses once again.

But as the situation continued to deteriorate, the company, set up by former Labour prime minister Dom Mintoff in 1974, will close completely in March 2024 on its 50^th anniversary.

Instead, the government will set up a smaller airline with fewer planes and fewer routes served.

All its current employees, some 390, will be declared redundant, even though the government promises them the opportunity to be employed by the new airline.

However, this won’t be a straightforward exercise, as they will have to compete with other candidates in a new competitive and transparent recruitment process while their current conditions will be drastically reduced to meet budget constraints.

Even Air Malta’s assets, mainly real estate, will have to be bought by the new airline at a cost,

The Air Malta brand, sold five years ago to a new government company in a one-off transaction aimed at giving the ailing airline some more time to fly, will have to be issued by tender.  The new government airline will have to compete to acquire the AirMalta name and livery with other airlines which might be tempted to acquire the already well-established brand.

The new airline will also be unable to use the current, highly valued airport slots in London’s Heathrow and Gatwick, also sold off by disgraced former Minister Konrad Mizzi to raise more funds.

These slots, the property of another government company, Malta Med Air, will also have to be issued through a competitive tender process.

In all, the government is estimating that the cost of this new airline venture will cost the Maltese public an additional €440 million, over and above the hundreds of millions of euros already paid to keep Air Malta flying.

At the same time, Minister Clyde Caruana confirmed he will retain the €21,500 a month Chairman David Curmi, despite the fact he could not keep Air Malta flying.

In 2019, when Air Malta published its last set of accounts, then-tourism minister Konrad Mizzi publicly announced that accounts prepared by PWC had shown that Air Malta had made a profit of €1.2 million.

However, Minister Clyde Caruana said Air Malta has been generating losses for the past twenty years.

Previously, both current Prime Minister Robert Abela and his father, George, served as Air Malta consultants to Mizzi.