Air Malta: much has been achieved, but much more to do

Posted: April 15, 2012 in Airlines, Aviation & Airports (General News), Europe
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It has almost been a year since Louis Farrugia was appointed chairman of Air Malta – 11 months, to be exact.

Air Malta's restructuring plan calls for some €230 million to be invested in the airline - Photo: Airplane-Pictures.net

It is now time for him to look back and try and draw up some kind of overview of what has been done and what results have been achieved, and to look at the present challenges and try to look at possible future strategies.

It has, he tells me in an interview, been a very tough 11 months, with many board meetings – more than one a month. It is very clear that the task ahead is an enormous one. He and his team are trying to restructure an airline within the guidelines and targets set by the European Commission while at the same time keeping it operating, having continuous dialogue with the people employed by it as they decide about their future and motivating those who are staying as they adjust to a new work ethic, and holding talks with the government and stakeholders on the issues facing the airline.

The restructuring plan calls for some €230 million to be invested in the airline of which €128 million will be represented by an increase in share capital and the rest sourced from the airline’s own resources such as the sale of subsidiary companies, private sector funding through banks, etc.

This is a four-year plan: it is important not just to cut costs but also to find resources to reinvest.

It is also important to remember that, although Air Malta was profitable in the first years of its existence, and has contributed mightily to the country’s economy and tourism, today it is being asked to make a profit at a time of financial instability and intense competition – not just in pricing but also with regard to the numerous destinations that have been opened and that compete with Air Malta’s established routes.

The enormity of the task at hand can be understood also with regard to the EU negotiations, with guidelines that must be met and the articulation of a plan that fits within those guidelines.

Restructuring also includes negotiations with the unions, not just on voluntary restructuring but also on facilitating the transformation of the airline to a true commercial basis with the creation of a new organic structure with new appointments.

Negotiations with stakeholders included not only the government with regard to the increase in share capital, but also the banks as well as the commercial sector, such as the tourism trade and suppliers.

The approval by Cabinet to increase the company’s share capital by €128 million over the next four years was a very important step that has been taken as part of this restructuring exercise…..

Read the full story from The Malta Independant Online….


By Noel Grima
Article published on 15 April 2012


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