Air Malta will be laying off 108 of its 134 pilots and 284 of its 333 cabin crew members after it failed to reach an agreement with the pilots’ union and the cabin crew members' union over pay cuts necessitated by the Covid-19 crisis.

Early on Wednesday, MaltaToday reported that the airline had sent a letter to the Industrial and Employment Relations Department indicating the dismissals. MaltaToday reported that the airline had asked pilots to accept a salary cut of €1,200 a month but the offer was refused by ALPA, the airline pilots union. Air Malta captains earn €140,000 while pilots earn €80,000.

A statement issued by the airline on Wednesday evening confirmed the news and also indicated that 284 members of its cabin crew will be made redundant as well, before laying the blame for the redundancies squarely at the feet of the unions representing pilots and cabin crew members.

“The COVID-19 outbreak has substantially affected the Company. Not only have its operations dwindled to a mere 2 flights per day (as opposed to the scheduled average of 20 daily flights) but the extraordinary amount of cancellations, and therefore reimbursements, together with the obligation to continue servicing fixed costs, such as aircraft lease payments, have led the Company to necessitate mitigation of costs, including payroll costs”, the airline noted in its statement.

The airline noted that tourism had been brought to a halt and that the airline’s cash returns from the sale of flight tickets had vanished.  Repatriation flights which the airline is currently carrying out are not enough to help the company maintain its current fixed payroll costs, they said.

The airline said that it had offered Unions representing different sections of company employees “to agree on a minimum floor of the average pay of the last twelve months, capped at €1200, as basic monthly income which would be applicable for all those on indefinite and definite contracts, meaning that all employees, including staff at head office, engineers, cabin crew, and pilots would get a minimum income of €1200 monthly even if they are not required to operate and stay at home.”

“This would have also meant that no employee is made redundant and that those employed on a definite contract would also have been retained in employment”, the airline said before adding that the offer specified that if compensation for actual work performed exceeded €1200 in a month then they would be compensated according to their respective collective agreement.

Only the engineer’s union accepted the proposal, the airline lamented in its statement, saying that they had done so through a 90% vote by its members.

The airline said that both the Union of Cabin Crew (UCC) and the Airline Pilot’s Association (ALPA) had rejected the company’s offer – with the former having had its deadline for reconsideration extended four times, and the latter insisting on further counter offers from the airline.

“As a result, the Company regrettably had to announce to its workforce that a number of employees falling under the collective agreement signed with the UCC and ALPA will be made redundant due to the current circumstances and the failure to reach agreement with the same Unions on cost mitigation measures which could have avoided such redundancies”, the airline said.

Air Malta detailed that out of the 333 employees who fall under the collective agreement signed with the UCC, all 145 of those who are on a fixed contract have been advised that their employment will not be extended beyond its current term, while 139 out of the 188 employed on an indefinite term contract will also be made redundant.

Apart from this, the airline said that it will be making 108 pilots out of the 134 it employs under the collective agreement signed with ALPA redundant as well.

“The employees retained will be sufficient for Air Malta to continue operating at current levels which are expected to be the case for a number of months”, the airline said.

“At the same time, Air Malta’s top management, has already accepted a significant pay cut in their salaries as well as the removal of allowances and perks, despite that they are still working to save the airline in these turbulent times”, the airline pointed out.

They said that in a situation where the airline’s hands are tied to almost a zero-revenue situation, they cannot do otherwise to survive.  They expressed their disappointment that the unions were “not considerate and sensitive enough to its very hard financial situation” when the aviation industry is facing its worst crisis in history.

"ALPA has not refused any proposals which would require sacrifices from its members" - ALPA

Meanwhile, in a separate statement also issued on Wednesday evening, ALPA reacted to the news by stating that they had not refused any proposals which would require sacrifices from its members, and insisted that the burden of the situation is borne equally by all employees from “the very top to the bottom.”

“Contrary to media assertions in recent days, ALPA has not refused any proposals which would require sacrifices from its members, resulting from the Covid-19 predicament. In 2004, ALPA members had their salaries slashed and subsequently frozen for a number of years due to other negative world events”, ALPA said in its statement while also noting that the pilots being sacked have formed the backbone of the company.

“However, ALPA insists that the burden of the current situation must be borne equally by all employees from the very top to the bottom. ALPA is willing to carry its fair share of the burden, after ensuring that the process of meaningful and effective consultation has been duly carried out. Air Malta resorted to informing the DIER about redundancies without effectively exploring other possible avenues and instead presenting ALPA with a ‘fait accompli’. Airlines around the globe held meaningful consultations with their pilot associations which resulted in agreements being reached amicably”, the union wrote.

ALPA said that the airline’s CEO Clifford Chetcuti had lost his opportunity to “come clean and tell his workforce up front about his salary cuts and perks, like most other respectable CEOs around the globe have done. His lack of transparency is creating negative undercurrents within the workforce and is raising the ire and suspicion of most. ALPA demands answers as to management’s pay cuts to ensure fairness across the board and insist that management should lead by example.”

They asked for clarity on the company’s plans for the future, and on how Air Malta will honour third-party constraints, while against calling on Chetcuti to “come clean” about his percentage pay-cut from “his alleged €300,000 salary excluding perks”, before asking pilots to take up to a 90% paycut and “to explain the reasons why in such a situation the employees must shoulder the burden, when his team was duty bound to shield the employees from the effects of such a calamity, in the first place.”

“ALPA also questions the wisdom of leaving just enough pilots to man only two aircraft when Air Malta is going to be crucial to rebuild a badly shaken tourism industry”, they concluded.

 Speaking to Times of Malta, ALPA chief Dominic Azzopardi said he was left “speechless” by the decision. He called on the government to nationalise the airline, but added that there had been no word from Economy Minister Silvio Schembri, who is politically responsible for Air Malta.

Speaking on Indepth last week, Schembri said the airline’s top management had already accepted to take a substantial pay cut. He also said the EU had agreed to relax state aid rules which had previously barred the government from giving financial aid to the airline.