Air Malta has been unfortunate this year in the fact that it has registered Lm6.353 in losses – up by almost a million on the previous year. But one must always remain positive and it seems that after much chest-beating, crafty negotiation and what not – the general airlines situation in Malta is finally settling down.

Air Malta was extremely unlucky to post these results, and could have possibly broken, had fuel expenditure costs not increased by over Lm7

million.

It has been argued by many people that Air Malta should hedge for fuel, but recently the masters of “going cheap”, Ryanair, also had to admit defeat in that they had lost some e13 million because they had made a hedging agreement at the wrong time, something that the management admitted.

That could be a big problem for Air Malta – hedging. For all the terms and political battles in which it is used, hedging is a simply a gamble. When you hedge an agreement, it is like betting on the first round of a hand of cards – you don’t know what is going to happen to change your game. For instance: say Air Malta hedged now, and – just for simplicity’s sake – got fuel at $10 a barrel. If there is another slow-down in oil production in Nigeria, coupled with another hurricane hitting refineries in the States, we could see oil prices surge and Air Malta would benefit. However, on the flip side, if Iraq stabilises and the Iran standoff finally defuses (these are very simplified examples), then prices could fall to, say, $8 a barrel and Air Malta would lose out. We are not paying for aubergines and marrows here, we are paying for aviation fuel – something very volatile and highly dependent upon the international climate.

People who advocate hedging at every possible opportunity are either huge risk-takers or simply do not have understand how the system works. But on the other hand, when asked what effect the e35 fuel surcharge on every ticket was having, Air Malta said that the effect was, in fact, minimal. Well, here’s an idea: get rid of it. If it is not generating that much revenue, then kill the surcharge, which might hopefully get more bums on seats.

Of course, it is easy to throw something like this into the ring off the top of your head, but Air Malta should really sit down and focus, to see what is holding it back and where it can grow.

Air Malta’s non-fuel related costs, which accounted for Lm74.3 million of the company’s expenditure, have been slashed by 14 per cent, while the Malta payroll and Malta overheads have been cut by 12 and 10 per cent respectively. While we recognise that these are positive figures, the airline needs to cut and to cut more. Every penny is going to help.

We agree – wholeheartedly so – with Minister Austin Gatt that Air Malta must remain Maltese, but we also warn that it is still bloated, under-performing and jittery. One only has to look at the airline to see that it looks as if its confidence is battered. It should not be; things are looking up and this is where the company needs strong and direct leadership.

Too many people are still on that payroll. We understand that jobs are jobs but, at the end of the day, too much deadweight makes you sink, hard graft will keep your head above the surface.

There’s hope yet…