Talks between the government and the European Union on the restructuring of Air Malta are at an advanced stage.

Finance Minister Tonio Fenech said in Parliament yesterday that the talks were complex and confidential. He said he did not wish to comment until the talks were concluded.

Last July, The Times reported that the government was holding talks with the EU on ways to pump more funds into the national airline, which made a €31 million loss in the last financial year.

The talks also involve the drawing up of a new business plan for the carrier that will see it take cost-cutting measures to be in a better position to compete.

The Finance Ministry would not comment and did not even want to say whether the talks would lead to direct state aid. To do so would require the EU's green light, although no such consent would be necessary if the government opts for a recapitalisation exercise.

Prime Minister Lawrence Gonzi said in an interview a few weeks ago that Air Malta had a strategic role, but it was essential that the airline was viable.

Restructuring would therefore be made over the coming weeks and months to ensure that the airline could overcome the hurdles which it was facing.

He said a study was also needed on how best to maximise the routes operated by Air Malta.

Opposition leader Joseph Muscat said that Air Malta was a vital national asset and no actions should be taken to undermine it, or lead to its sale.

"A Labour government would not feel itself bound to any commitment by this government which would lead to the sale of Air Malta," Dr Muscat had said.