Alitalia, the Italian national airline with whom Air Malta signed a memorandum of understanding which will lead to negotiations aimed at the sale of 49% of the company’s share, has reported a loss of more than €200 million for the year 2015. Moreover, the company which is 49% owned by Etihad, is expected to lose almost another €100 million by end of this year.
According to Italian newspaper Il Sole 24, despite the sale of shares to the giant airline company Etihad which contributed to a €194 million injection and the lowest fuel prices in years, Alitalia still recorded a staggering loss of €200 million. The newspaper noted that 2015 was also the ‘golden year for air transport’, but still, somehow, the Italian company managed to pile so much loss.
As for 2016, the article states that loss this year could peak at a €100 million, which is far more than the predicted €44 million which was what experts had estimated.
According to journalist Gianni Dragoni, the Italian national airline fails to compete with other airlines from all over the globe. There was a particular decrease in the airline traffic to low cost airlines.
The article makes it clear that so far, these predictions are only rumours and that one needs to wait for another month to see if these predictions are true. Understandably, the article mentions Air Malta and the negotiations which might lead for the two airlines to work hand in hand. It refers to Air Malta as “the company which still sails in troubled waters with a limited cash flow.”
Dragoni writes that the agreement between Alitalia and Air Malta was supposed to be concluded by end of July following a memorandum of understanding signed in April. The deal was now postponed to October, according to the paper.
“The Maltese Prime Minister, Joseph Muscat, is raising lots of doubt regarding this deal,” he writes.
The article concludes by saying that while airlines from all over the globe are finally enjoying a good year, companies such as Alitalia and Air Malta are still trying to find their future.
After negotiations with the EU Commission in 2011 which allowed a state subsidy of €130 million, it was agreed that by 2014 Air Malta had to balance its budget, and register a profit by March 2016.
After this period, under EU state-aid rules which safeguard fair competition within the EU’s internal market, the only injection of cash allowed would have to come from private sources.
Air Malta projected losses of €4 million for the financial year-end March 2016, significantly lower than the €15 million loss registered at the end of March 2015. The EU Commission did not hand down any penalties in view of the progress made between 2015 and 2016.
Earlier this year the government said that it spent months of negotiations with various airlines in order to acquire a strategic partner which would buy a minority stake and inject some much needed funds into Malta’s national airline – resulting in the MoU with Italy’s national carrier, Alitalia.
Recently, Prime Minister Joseph Muscat has started hinting the possibility of pulling the plug on the Air Malta and Alitalia deal. He said that the government is considering all options and assured the public that the government has a fall-back position just in case the deal is off.