The Malta Independent 3 June 2020, Wednesday

Talks between Air Malta and Alitalia still ongoing – Minister Zammit Lewis

Helena Grech Tuesday, 2 August 2016, 07:37 Last update: about 5 years ago

Negotiations between Air Malta and Alitalia are still ongoing, Tourism Minister Edward Zammit Lewis said in comments to this newsroom, following a Polish media report which stated otherwise.

In addition to this, sources within Air Malta have confirmed that the government has asked Alitalia for an extension till the end of September to analyse Alitalia’s proposals.

A report in a Polish newspaper yesterday said that “Alitalia is no longer interested in Air Malta,” but did not divulge further detail. A lawyer representing Air Malta recently admitted in court that despite the five-year restructuring plan – launched in 2011 – which was to see the carrier register a profit by March 2016, it still had roughly €66 million in outstanding debts.

Contacted by The Malta Independent, Dr Zammit Lewis said “Talks between the two parties are moving at a very strong pace. We are exploring different models in the interest of both parties.”

“As we have stated many times, Government will only do this deal if our long term objectives of having a profitable and commercially viable airline are met. At this stage, I cannot divulge more information for obvious commercially sensitive reasons,” he added.

A Memorandum of Understanding (MoU) was signed between the two national airline carriers last April, leading to negotiations aimed at the sale of 49 per cent of Air Malta’s stake to Alitalia. Alitalia is now 49 per cent owned by Etihad.

After negotiations with the EU Commission in 2011 which allowed a state subsidy of €130 million, it was established that by 2014 Air Malta had to balance its budget, and register a profit by March 2016. After this period, under EU state-aid rules which safeguard fair competition within the EU’s internal market, the only injection of cash allowed would have to come from private sources.

Air Malta projected losses of €4 million for the financial year-end March 2016, significantly lower than the €15 million loss registered at the end of March 2015. The EU Commission did not hand down any penalties in view of the progress made between 2015 and 2016.

Earlier this year the government said that it spent months of negotiations with various airlines in order to acquire a strategic partner which would buy a minority stake and inject some much needed funds into Malta’s national airline – resulting in the MoU with Italy’s national carrier, Alitalia.

It is understood that should negotiations with a strategic partner conclude, the same strategy will be adopted as was the case when Chinese firm Shanghai Electric Power became a strategic partner of Enemalta. In order to make local operations more efficient, a number of staff were transferred to government departments in order to avoid making employees redundant.

Air Malta is also currently involved in a dispute with the local Airline Pilots Association over a long expired collective agreement. In protest, ALPA has asked its pilots to turn up for work without their official jacket or cap. A court case ensued with the partied being told by the magistrate to find common ground, which however was not achieved in meetings held between the two sides.

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