Malta’s new budget airline will be different to the former AirMalta despite attempts by the government to frame the closure of AirMalta and the creation of a new budget airline as a seamless transition, even possibly retaining the same name and branding, the European Commission told The Shift.
Malta’s 50-year-old national carrier – Air Malta – will be completely shut down next March after years of financial mismanagement and a refusal from the Commission to allow more money to be pumped into it over fears of violating EU state aid rules.
At a press conference on Monday, when the closure of the failed AirMalta was announced, the government was keen to position it not as a failure but as a ‘seamless transition’ from AirMalta to another entity which would hopefully retain the same name, branding, and assets.
Reacting to the government’s announcement, made given unsuccessful negotiations with Brussels led by Finance Minister Clyde Caruana, the Commission made it clear that this so far unnamed airline will not be another Air Malta.
“The Commission takes note of the Maltese authorities’ plan to create a new air carrier, which will be different from the existing carrier, Air Malta. We have no further comment on the matter,” a Commission spokesman told The Shift without getting into any specific details.
The Commission also confirmed that it has been in constructive contact with the Maltese authorities over yesterday’s announcement but refrained from making any direct comments.
As revealed by The Shift in August 2022, the government was forced to abandon its original plans to inject some €290 million into Air Malta to save it from crash landing due to EU opposition over state aid rules. Air Malta was already given restructuring aid in 2012 to keep it from bankruptcy.
Between 2012 and 2014, the company reached its goals, tied to a five-year restructuring plan, but shortly after Labour won its second mandate, the company started registering massive losses once again.
But as the situation continued to deteriorate, the company, set up by former Labour prime minister Dom Mintoff in 1974, will close completely in March 2024 on its 50th anniversary.
Instead, the government will set up a smaller airline with fewer planes and fewer routes served.
The (roughly 390) current employees will be declared redundant, even though the government promised them the opportunity to be employed by the new airline.
The Air Malta brand, which was sold five years ago to a new government company in a one-off transaction aimed at giving the ailing airline some more time to fly, will have to be issued by tender. The new government airline will have to compete to acquire the AirMalta name and livery with other airlines, which might be tempted to acquire the already well-established brand.
In all, the government is estimating that this new airline venture will cost the Maltese public an additional €440 million, over and above the hundreds of millions of euros already paid to keep Air Malta flying.
In 2019, when Air Malta published its last set of accounts, then-tourism minister Konrad Mizzi publicly announced that accounts prepared by PWC had shown that Air Malta had made a profit of €1.2 million.
However, Minister Clyde Caruana said Air Malta has been generating losses for the past twenty years.
(Theshiftnews.com)
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