Finance Minister Clyde Caruana on Monday sought to blame Nationalist governments for having burdened Air Malta with early retirement schemes which brought it close to financial ruin and would cost €100 million to remove.

Speaking in parliament during the budget debate, the minister tabled collective agreements signed in 2009 between the airline and cabin crew and in 2012 with pilots.

Those collective agreements, he said, were effectively a millstone around the airline's neck and the airline could not move forward until they were removed.

But commitments had to be honoured, and removing those clauses would end up costing the country  €100 million. 

"Where else in the world can someone retire at 55 and continue to get two-thirds of his pay until he turns 65, as in the case of the pilots?," Caruana asked.

"No, this was not Konrad Mizzi's work," he said to Opposition interruptions. This agreement came into force on October 1, 2012, he said.

He said there were other damaging issues which he would reveal later, including side agreements in 2012 which compressed the pilots' salary scales from 1- to five, causing untold problems for the airline.  

"The airline cannot continue to make such losses and we want to liquidate these clauses, but taxes have to make up for them and it will cost us some €100 million," he said.

The other option, of going to court, could end up damaging not just the airline, but a major chunk of the economy, he warned. 

The minister recalled that both sides (of the House) had some fault in the airline's current situation, another factor being uneconomic flights. It was for that reason, he said, that as soon as he could, together with airline chairman David Curmi, the decision was taken to stop loss-making flights and services.

The minister said he wanted to assure everyone that he was working hard, in talks with the European Commission, to ensure that the country would continue to have its flag carrier, moving forward.

Build-up of financial losses

Air Malta has been suffering financial losses for several years and the situation was made worse when the COVID-19 pandemic brought most of air travel to a halt. During the height of the outbreak the airline was making losses of over €170,000 daily. 

In April last year  the government asked the European Commission to authorise a five-year €290 million state aid financing plan which it said would help turn Air Malta into a sustainable and profit-making enterprise.

But in June of that year the Commission asked Malta to come up with a smaller, “more realistic” figure.

In January this year, it was announced that the government planned to slash Air Malta's workforce by half as part of a major cost-cutting plan. Its 890-strong workforce will be cut to 420. Workers were offered a job in the public sector or early retirement. Those who opted for a golden handshake were offered anything between €40,000 and €300,000.

Last October Times of Malta revealed that the government was planning to offer Air Malta pilots a golden handshake of between €750,000 and €1 million if they dropped a clause in their collective agreement which would have seen them receive two-thirds of their salary for over 10 years if they retired early.

Previous Air Malta bail out attempt

This is not the first time that Malta has tried to bail out the flag carrier.

In 2010, the government was given permission to grant the airline a state loan of €52 million to stop a financial crash landing, followed by EU approval of €130 million bailout plan in 2012. 

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