With an enhanced management structure, a studied cost-cutting exercise, improved efficiency and a better utilisation of its resources, the national airline has managed to halve its operating loss in one year.
In addition to this, for the first time ever, Air Malta carried more than two million passengers in the year up to March while it increased the number of seats made available by nearly 100,000.
Air Malta chairman Lawrence Zammit said the operating loss dropped from Lm6.2 million to Lm3.1 million. He said that despite hedging agreements and their benefits, Air Malta’s fuel bill increased by Lm12.8 million during this year.
He said the company introduced an outsourcing policy under which certain aspects of the company’s operation are carried out by people outside the company. This proved cost effective as the company saved around Lm250,000 on revenue accounts, another Lm250,000 on cabin cleaning as well as other savings on in-flight entertainment, catering and the call centre. On the latter, Mr Zammit said that thanks to the outsourcing, calls were being dealt with faster and in a more effective manner.
Mr Zammit said Air Malta managed to reduce its labour costs, invested heavily in Information and Communication Technology, carried out a thorough advertising and promotional campaign and also launched a new website.
The chairman said that thanks to these measures, the company’s turnover increased by Lm12.7 million over the financial results of March 2006. The company increased its revenue by Lm8.7 million of scheduled services and Lm3.3 million on chartered services.
With regard to its staff complement, Mr Zammit said that a voluntary redundancy scheme reduced the staff numbers by 400 people and the company now employs 1,600.
On the fleet, Mr Zammit said the company had its three Airbus aircraft delivered, bringing its fleet up to 12, with two of them based in the UK.
With regard to the impact of low-cost carriers on Air Malta, Mr Zammit said the company was affected in a drastic way with its flights from the UK with a 24 per cent drop in revenue from these flights. He said that as a result of the competition of Ryanair and the reduced prices introduced by British Airways, Air Malta had to reduce its prices drastically but still managed to retain the same number of passengers. He said that the UK flights to Malta were still profitable.
Investments Minister Austin Gatt said he was satisfied that Air Malta managed to reduce its operating losses by half, adding that that company’s restructuring plan to revive the company was on track. He said the difficult decisions which had to be taken in 2004 were bearing fruit and returning the expected results. He said this summer was crucial for the company because based on these results, one would be able to gauge the true result of the restructuring exercise which comes to an end in December.
Dr Gatt also referred to the business pact signed between the company and the unions representing employees in 2004. He said the unions this time did not wish to sign one pact but wanted to negotiate different packages. He said the government was negotiating with the unions and hoped that agreements would be reached soon.
“I appeal for common sense. The country needs Air Malta, which employs 1,600 people. The company cannot continue to make a loss. The management and the government are committed to the reform. Air Malta has a bright future ahead,” he said.
Asked by The Malta Independent whether the stand taken by the unions meant something, Dr Gatt replied in the negative. He however said: “It would have obviously been better with a business pact. But this does not mean that we cannot reach a sensible agreement. Everyone has to be realistic. We are not Lufthansa or Emirates. Our wages still offer employees a good income and a good standard of living.”