Mr Funk, who has only given one interview to the Maltese media since becoming CEO, was speaking to Leonard Hill of Air Transport World. The two-page interview appears in the November issue.

Mr Funk, who spent 41 years at Swissair, has had to cope with what Mr Hill called a “formerly sleepy Mediterranean carrier” which has lost close to $58 million over the past two years, including an estimated $32 million in the fiscal year ended last 31 July.

Steps taken by the airline so far, says Mr Hill, include streamlining the executive leadership ranks from a 24-person group to a six-member team of chief officers, along with a three-year wage freeze for staff plus improved work practices and other elements.

Savings are projected at $4.3 million and the aim is to trim operational and administrative costs by a further $10.7 million.

Mr Hill said that essential to the rescue scenario is a $72.9 million government recapitalisation that props up the balance sheet – a restructuring, he notes, that took place shortly before Malta joined the EU in May. Mr Hill said the EU “might have looked askance at the state aid.”

Mr Funk told Air Transport World that he is on schedule with the turnaround and would be ahead of plan but for the rise in fuel costs.

Core-business cost reduction till next 31 March (the airline will move to a 1 April financial year next year) will be $5.7 million. Overall savings from various initiatives in progress include $3.7 million from the wage agreement added to between $8.5 million and $11.4 million through increased revenue from foreign-based operations.

Other unspecified measures bring the total to $27 million. Among these measures, Mr Hill wrote, are a review of distribution channels, accelerated online booking and the renegotiation of contracts with suppliers.

However, he wrote, there are limits as to what Air Malta’s 98 per cent owner, the government of Malta, will accept.

Although there is a “wage pause”, workers will be remunerated retroactively between 2008 and 2010 for forfeited raises. There have also been no lay-offs among the 1,763 employees who support a fleet of “just” 15 jets – a ratio of better than 115 employees per plane

Air Malta, Mr Hill wrote, certainly needs to increase efficiency. With Malta’s accession to the EU, it is losing its lucrative monopoly as the sole provider of ground handling services at MIA, which is served by 61 airlines. GlobeGround is poised to enter the market this month.

MIA averages 72 aircraft movements a day, of which 52.3 per cent are Air Malta flights.

Air Malta has a small population base to build on but its primary income source is the 1.2 million visitors a year. Tourism contributes to an estimated 45 per cent of GNP.

Air Malta is also trying to address its high degree of seasonality of traffic flow which creates excess capacity for it during the winter months. One way of addressing this problem is to look elsewhere. Since May, the airline has based two leased A320s in the UK for charter flights to, among other places, locations such as Greece, Italy, Spain and Portugal.

It is also operating seventh-freedom flights from Catania to London.

In a move to pre-empt low cost airlines from entering the Maltese market, it is now operating three times a week “red-eye” flights to London Stansted, branded as Fare4U. These could be extended to a daily service and also expanded to Central Europe, Mr Hill wrote.

As from the beginning of this month, Air Malta has introduced a one-way fare concept called FlexiFly, which is “competitively priced and capacity controlled’, encompassing the entire network of scheduled services.

In a typical week in August, the airline served no less than 45 destinations.

Business class has been cut back to 11 cities to save costs in what is basically a point-to-point, tourism-driven airline.

About 35 per cent of scheduled traffic revenue comes from the UK, with Germany, Italy and France being the next most important markets. About 80 per cent of Air Malta’s total revenue is generated through sales outside Malta.

In the first half of the financial year, through 31 January, total airline revenue dropped to $91.7 million, from $99.1 million in the previous year. Seat load factor declined from 69.3 per cent to 66.6 per cent on 662,000 passengers in the period, compared with 685,900 in the year before.

Rescue efforts are starting to make an impact, Mr Funk told Mr Hill, although he warned about the influence of market forces on business processes.