Concerns over €200,000 a month consultants hired to ‘transition’ Malta’s failed airline

The Abu Dhabi-based consultancy company that will be paid €200,000 a month to transition the set-to-close Air Malta to a new carrier was previously and unsuccessfully engaged in restructuring and saving the airline. Meanwhile, their fees raise questions over EU state aid violations.

Air Malta will close for good on 31 March 2024 following multiple attempts to restructure and keep it profitable, including significant cash injections and failed pleas for more European Union state aid.

The government will create a new airline, similar to budget carriers, at a cost of €300 million on top of the hundreds of millions already ploughed into Air Malta over the years.

Finance Minister Clyde Caruana and Chairman of Air Malta David Curmi announced that Knighthood Global Ltd, based in the United Arab Emirates, will facilitate the transition for €200,000 a month. The same consultancy firm was engaged a few years ago to help in Air Malta’s restructuring.

In 2021, Knighthood Global was given some €2.4 million to restructure the airline to save it from bankruptcy. This also failed and was another nail in the coffin of the beleaguered airline.

No information has been given on who is paying the bill for the consultancy this time around. If it is the government, this would require the consent of the European Commission as it would constitute state aid.

Malta was given EU permission to inject restructuring aid in 2012, and an attempt to request more in 2021 was turned down, with the Commission making it clear a second lifeline would not be allowed.

While confirming The Shift’s revelations over a year ago that the government had decided to close Air Malta, Caruana could not explain why he engaged the same firm that failed to deliver success in the past.

“This ‘news’ just confirms that nothing will ever change. These are the same people who gave the wrong advice to Air Malta, leading to its closure. Now, we asked them again to come up with a new plan. It’s simply unbelievable, if not farcical,” a top Air Malta official told The Shift on condition of anonymity.

Who are the ‘new’ consultants?

Knighthood Global is co-owned and managed by James Hogan and James Rigney, the former CEO and CFO of Etihad Airways.

At the end of 2017, Hogan and Rigney were forced to step down from Etihad after the Abu Dhabi state airline registered heavy losses because of its failed acquisition of stakes in Alitalia, Air Berlin and others.

The Abu Dhabi government blamed the two for implementing the wrong expansion strategy, resulting in severe losses.

At this time, Air Malta was also put up for sale, and the government was negotiating with Hogan and Rigney on behalf of Etihad and Alitalia.

While at Etihad, Hogan had convinced the Labour administration, led by disgraced former prime minister Joseph Muscat, to sell Air Malta’s majority shareholding to Etihad through Alitalia. But the deal fell through at the eleventh hour, on the watch of then-chairperson Maria Micallef.

Soon after, the Italian government announced the closing of Alitalia.

(Theshiftnews.com)