The Malta Independent 2 February 2023, Thursday
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Konrad Mizzi’s Plan B: close down Air Malta and open a legacy-free airline

Rachel Attard & David Lindsay Sunday, 17 September 2017, 14:00 Last update: about 6 years ago

As Air Malta and the airline's unions continue to negotiate new collective agreements for its flying crew, Tourism Minister Konrad Mizzi has a Plan B should talks, which have proved difficult so far, fall through: close down Air Malta and open a new airline without any legacy constraints.

Contacted yesterday, Mizzi, under whose ministerial remit the ailing airline falls, expressed confidence that, "With everyone's cooperation we can successfully implement the revitalisation programme for the airline."

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But, he added, "If union negotiations fail we have a responsibility to ensure that a Malta-based niche carrier serves Malta's needs.

"In the eventuality that we will not be in a position to implement the revenue-driven revitalisation plan, we will then have no other option but to consider Plan B due to solvency issues.

"This would mean the closure of Air Malta and the opening of a new airline without any legacy constraints to fill the void. It is our responsibility to have a Plan B."

The implementation of such a Plan B would be a last resort but it is a prospect should the airline fail to convince the flying crew unions that it has already given them the best possible offer for their new collective agreements.

In terms of these delicate employee relations, where the aim is to finalise collective agreements with the unions for a five-year period, Mizzi said yesterday, "As a company we are negotiating and have offered fair proposals to the flying crew, which are the most the company can offer at the moment. Anything beyond what was offered means that the numbers will not work. As part of the collective agreements we need to secure improved productivity and flexibility."

Mizzi stressed that the government is committed to Air Malta, and to strengthening and growing the airline. He added, "I am convinced that there is an important niche market for a Malta-based airline. This is of strategic importance because a Malta-based airline is a key enabler for tourism, business, and the economy."

Mizzi explained that the revitalisation plan currently under implementation is based on revenue growth, more flights and frequencies and increased destinations.

He elaborated, "For instance, the airline has re-introduced its Tunis, Frankfurt and Manchester destinations and it has increased the fleet by another aircraft.

"These are just some early initiatives, with many more in the pipeline."

But such a plan, he warns, "requires extensive change and needs to be revenue and efficiency driven".

Also contacted yesterday, Air Malta Chairman Charles Mangion confirmed that in recent days and over coming weeks a number of meetings are being held between the airline's management and the unions.

The negations on the collective agreement are being chaired by George Abela and Roberto Cristiano.

Mangion said:"We are doing our best for an agreement to be reached but one has to keep in mind that the airline will not receive any subsidies from the government over and above that which it had originally received during the restructuring plan.

"We also need to ensure that the company stands on its own two feet."

Mangion added, "We are offering the unions the maximum that the airline is in a position to offer without bankrupting the company, since we only have the company's resources to work with."

We only get one chance to ensure the business model works - Mizzi

Mizzi said that the prospects for further state aid or subsidies are unrealistic, stressing that: "We only get one chance to ensure the business model works and that the company generates positive cash flows and is solvent."

To achieve the revitalization of Air Malta, the airline has set out to work on different work streams, Mizzi explained.

One such stream is revenue growth., "We aim to keep growing the airline, increasing aircraft, flight frequencies and destinations. This will be complemented by aggressive sales to ensure that passenger numbers and profitability improve."

Another is the development of a new product range. Mizzi said, "We aim to do this in three stages starting by the unbundling of fares. We are in the process of first launching the 'Go light' product in the coming days. We will then make changes in catering service provided on board, and subsequently work on an improved Business Class."

Internal change, Mizzi said, is also essential: "We have set out to improve and reorganize Air Malta's finances and also make certain important 'make or buy' decisions."

A Ryanair connection?

Last Sunday Mizzi had announced that Air Malta, the government and Ryanair have been in talks to strike a code-sharing deal that will see Ryanair bringing passengers to Malta after which they would be transferred to Air Malta for onward travel to African destinations.

The talks over such a deal come at a juncture that Prime Minister Joseph Muscat, speaking the same day, said was crucial for the national airline, which has been struggling to find itself a strategic partner. 

Although there was no talk of such a partnership being struck with Ryanair, Muscat said yesterday with reference to the talks: "We have a vision for Air Malta, and it is a make or break moment for the airline."

Muscat also spoke about Air Malta being "not only the airline of the Maltese Islands, but of the Mediterranean".

"We are opening up a new road for Air Malta's future," he said.

He said that discussions with Ryanair, if fruitful, would make it a more attractive proposition for linking up with a strategic partner.

Stressing that this was an important moment for the national airline, Muscat appealed for cooperation from all stakeholders to help "ensure a future for the company and all who depend upon it".

Ryanair and Air Malta are also considering collaboration on sales and marketing initiatives, including leveraging Ryanair's web presence for sales.

Threatening employees not the way forward - UHM, PN

Both the UHM-Voice of Workers and the Nationalist Party yesterday said in statements that threatening employees was not the way forward. 

The UHM said, "The government should seek to find the best strategy with concrete plans for the future of Air Malta and not threaten their workers with dismissal if they disagree with what is offered to them."

It added that the company's workers "should not be the sacrificial lambs for the problems the company has suffered over the years because of weak plans and unsustainable strategies".

The PN, on its part said, "The Nationalist Party insists that Air Malta needs to have a sustainable future direction that, in a broader context, reflects the role the airline had and still has in economic and social development in our country, particularly, but not exclusively, tourism.
"The Nationalist Party has always been and will always continue to be clear with employees. Threatening is not the party's style."


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