Minister Zammit Lewis today announced that a memorandum of understanding has been signed with Air Malta which will open up negotiations leading to the sale of 49% of the national carrier’s stake to Alitalia.

The announcement was made during a press conference following a meeting held with unions to announce the government's decision. The government's intention is to keep the majority stake in the national airline, and great attention will be given to the future of the workers, he said.

After months of negotiations with various airlines, the government has now decided to take the discussions to the next level with Alitalia, the Minister said. The financial value of the transaction is still to be determined.

“This is one step of the process and there is still a long way to go.  The signing of this MOU means that we will cease talks with other airlines and start more detailed discussions with Alitalia” said Dr Zammit Lewis.

The MOU will lead to further and greater discussions on the details of the transition, the minister said, and the aim is to make a turnaround in the national airline.

“This was the first milestone and therefore we are making this announcement. The MOU document will be tabled in parliament on 25  May, once the confidentiality period agreed between both parties expires,” added Dr Zammit Lewis.

It is aimed that a technical team will finalise details by July, and the intention is to complete the deal as quickly as possible to start a new chapter for the national carrier.

The minister said the agreement is a win-win situation for all the stakeholders. Air Malta customers will be able to benefit from Alitalia's partnerships and this will improve the country's connectivity. This is also beneficial to the tourism industry as more people from around the world will have a better connection with Malta.

Etihad Airways owns 49% of the shares in Alitalia, one of a number of satellite airlines owned by the UAE-based carrier.

Alitalia’s CEO Cramer Ball said: “We are on track to become a profitable entity by 2017 and we need to look and plan for the future, which is why we have decided to look closely to see whether Air Malta can fit into our strategic growth, particularly how our networks can complement each other in areas such as southern Italy. 

Dr Zammit Lewis said the government would ensure that all milestones were communicated to stakeholders, employees and the general public.

Chairperson Maria Micallef said the MOU is a "ray of hope for the future of the airline." The airline should end the current financial year with a loss of €4 million, down from €16 million the previous year, and a lot of expenses had been reduced, but more needed to be done. 

The airline is binding itself to negotiate only with Alitalia until a final agreement is reached on the transition.

Since Etihad bought Alitalia, the Italian company is close to making a turnaround, Ms Micallef said, and this is what Air Malta will be expecting to achieve in the future.

Chairperson Maria Micallef added that the MOU was signed after in-depth discussions confirmed the natural benefit that would arise by this strategic partnership. From a technical and network point of view there is a natural fit as the networks of Air Malta and Alitalia compliment each other. She also highlighted several other commercial advantages for Air Malta if this deal were to materialize, such as the financial benefit of joint-procurement, access to better IT systems, and other synergies that would boost profitability and growth, while reducing Air Malta’s current vulnerability due to its lack of economies of scale.

Dr Zammit Lewis said the benefits of being in a strategic partnership also extended to fuel procurement and other airline operations. Air Malta, he said, would still need to keep changing.

Minister cautious on future of workforce

The Tourism Minister was cautious when replying to questions about the future of Air Malta workers. “Air Malta’s was not a happy situation. We needed to find a strategic partner to help give us not only a lifeline but also a turnaround. Air Malta needs a change in mentality if it is to expand.”

He reiterated that Air Malta’s business model had to change, regardless of the strategic alliance. “This is one of the biggest challenges we face, and we have said as much to the workers. But this strategic partnership will also present them with more opportunities.”

Asked if their take home pay would be affected, Dr Zammit Lewis said at least workers were now informed of which company would be buying into Air Malta, seeing that many airlines from across the globe had been mentioned in the past few months.

Pressed to say if Alitalia had already demanded a workforce reduction, Ms Micallef said a number of technical issues would be going into the nitty gritty details, including on the future of the workers. “The required changes would then be implemented in an expedited manner,” Dr Zammit Lewis added.

Dr Zammit Lewis said success can only come with the help of the employees, the management, all stakeholders and the Opposition, which would be kept abreast of the developments.  

 

Asked what figure Alitalia would be investing in Air Malta, the minister did not go into specifics, but said past investments by the government did not achieve anything because they were not backed up by operational changes. “Air Malta has to become a truly commercial airline.”

 

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Earlier:

An agreement has been reached by the government to start negotiations with a strategic partner for the sale of Air Malta shares, GWU general secretary Josef Bugeja told the media outside Castille.

“We are so far happy with the information has given us. The airline chosen gives great importance to quality and the workers,” Mr Bugeja said. He would not divulge the name of the partner chosen.

The comments were given at the end of a meeting led by Minister Zammit Lewis for unions representing Air Malta workers.

 

Parliamentary debate

Speaking in Parliament this evening, Dr Zammit Lewis said the agreement is only the beginning of a turnaround for Air Malta, which has been registering losses since 2003. If the negotiations succeed, government will remain majority shareholder. There road ahead is long and hard.

He said he will remain in touch with the stakeholders, the employees and the public. Despite speculation in the media, most of the discussions still have to be held. Important discussions with the unions will take place, with the aim of concluding collective agreements.

Dr Zammit Lewis said the current administration found a bankrupt Air Malta, which was lacking a strategic plan and a vision. The previous administration had been sweeping the problems under the carpet. Exorbitant sums were being paid on top management salaries and perks, as well as unneeded resources.

The Labour government had promised to turn the situation around, whilst retaining control over the airline.

 

Air Malta’s losses have been reduced greatly. This was no easy task, the minister said, thanking the current airline management and employees.

 

Photos and video: Jonathan Borg