Air Malta is expected to announce a voluntary redundancy scheme for its employees in its effort to streamline its expenditure, sources told The Malta Independent yesterday. The scheme will offer employees who worked for the company for longer than seven years the option to retire and benefit from a tax-free payment equivalent to a month’s salary for every year of service. Payments are capped at Lm25,000.

The sources added that 1,224 employees are eligible to benefit from an average payment of Lm7,800. Early retirees will also be given a number of discounted flights on Air Malta every year for the remainder of their working life.

Air Malta management is hoping to save some Lm800,000 from its annual payroll costs as a result of this scheme, the sources added.

The scheme is part of the effort of the national airline to continue to compete with low-cost airlines which are defined by their streamlined operating costs especially in human resources. Air Malta can no longer rely on the comfort of government protection and any subsidies to cover its losses are illegal under EU law.

Air Malta management is said to be frustrated by the fact that its efforts to cut costs, which resulted in Lm3.85 million in savings since the 2003 “Rescue Plan Agreement” with the unions, were practically wiped out by the rapidly increasing cost of fuel, the sources said.

Initiatives such as the new voluntary redundancy scheme will allow Air Malta to compete and offer its customers value for their money and a more comprehensive service than low-cost airlines, the sources concluded.