The three hotels owned by Air Malta are the Holiday Inn Crowne Plaza, the Selmun Maritim Hotel and the Hal Ferh resort at Ghajn Tuffieha. The company has decided to divest itself of non-core business and focus on retaining its competitiveness in its core business.

In an interview, Dr Gatt said that at present discussions are ongoing regarding the land titles of the three properties. With regard to the Selmun and Hal Ferh properties there are also private partners to be negotiated with.

As regards Air Malta’s announced losses of Lm26 million for the year ended 31 July 2003, Dr Gatt said he had long forecast this huge loss. The whole restructuring exercise which he had spearheaded was aimed at bringing the airline’s core business back to profitability.

Writing off the losses sustained in Azzurra Air this year affected the company’s balance sheet and cash flow. It was for this reason that the government had injected Lm30 million and will now sell the airline’s subsidiaries.

This is not the first year that the airline suffered losses in its core business, from where profits used to be generated, Dr Gatt said. It was this which led to his ministry negotiating a memorandum of understanding with the trade unions. One additional worrying factor was due to the situation in the airline industry worldwide and the Mediterranean tourist industry with increased competition, diminished yields, a shifting away of tourists from Europe and cut-throat competition all around. Furthermore, there is the worryimg fuel situation, which is completely out of the hands of the airline.

Most of the changes agreed to in the memorandum of understanding have been implemented, Dr Gatt said, although some issues still have to be discussed with the unions. Ramp services has been made more productive, half days have been done away with, the hours of work changed and flexibility brought in. Active cost cutting is now in place and the management accounts from February to May already show a change has taken place. The airline, however, still stands to lose around as much as it lost last year in its core business in the current financial year which ends on 31 July, but the first real test which will prove the effectiveness of the recent changes will come in the next winter schedule.

The airline has undertaken new business, such as the inter-Europe flights out of Birmingham. The results of this venture have been very good, Dr Gatt said, and it is hoped the agreement will be renegotiated after October. The airline stands to make a modest profit from this venture.

The low cost venture flying to Stansted has had mixed fortunes, with a very good uptake from Malta but a low one from Catania, due to Ryanair being present there and the market not responding well to the availability of seats.

The top management of the airline is now being appointed: the airline will have eight chief officers by the end of this month, down from the previous 23. By October it is hoped the second and third tier of management will be in place as well. The airline was top-heavy and, according to one report, it had system where managers ‘hid away in the system”. Besides, Dr Gatt added, everyone was stepping on everyone else’s toes, there were no meetings and the place was run ‘by whispers in the corridors’.

All the airline’s routes have been re-examined and some have been dropped. However, Air Malta must recognise it is essential for Malta’s tourism, so if a route is doing badly it cannot be sustained indefinitely because there is a limit on how much the airline can support Malta’s tourism effort at a cost to itself.