Pilots set to receive €74m in early retirement payouts by 2028

KM Malta Airline’s pilots are set to get a €74m golden handshake over the next three years, in line with a controversial scheme that will see them claim early retirement.

The scheme was first introduced in a pilots’ collective agreement with the then Air Malta in October 2012 and has remained in force ever since.

When set up, the scheme effectively meant that pilots who worked with Air Malta for 25 years could retire early at the age of 55 and earn two-thirds of their pay until they hit the statutory retirement age of 65.

Upon Air Malta’s closure in March 2024, the scheme’s payment was taken on directly by the government, which negotiated a four-year window, until 2028, during which the scheme can be claimed.

Air Malta's turbulent time came to an end in March 2024 when the airline closed down. File photo: Matthew Mirabelli

Sources close to an ongoing industrial dispute between ALPA, the pilots’ union, and KM Airlines say the scheme (and its impending 2028 deadline) lies at the heart of the matter.

They say the union is unhappy at the airline engaging foreign pilots to take over from pilots who claim early retirement, instead hoping to stretch the four-year window further, enabling older pilots to continue claiming their full salary while younger pilots accumulate enough flight hours to eventually take their spot.

Pilots currently earn an average basic wage of €157,000 per year, excluding any bonuses or supplements, although individuals’ wages can be higher or lower according to their experience.

Meanwhile, first officers earn an average basic wage of €115,000 per year.

Questions were sent to ALPA on Monday afternoon, but the union is yet to reply.

In issuing its directives on Monday morning, ALPA said it was resorting to industrial action to safeguard the safety and wellbeing of its members after failing to make inroads in discussions over a series of issues.

These include disagreements over staff seniority and concerns over the method by which pilots can lose their license due to disciplinary action, among other issues, the union said. The directives made no reference to the early retirement scheme or the engagement of foreign pilots.

€74m between 96 pilots

The retirement scheme’s figures, seen by Times of Malta, reveal that it applies to a total of 96 pilots and first officers, at a cost of €73,964,684 to taxpayers.

This includes 23 captains and first officers who have already claimed early retirement and were given an average sum of €599,000.

A further 44 captains are set to claim early retirement over the coming years, each receiving just over €911,000 on average.

Meanwhile the 29 first officers eligible for the scheme will receive a little under €693,000 each, on average.

Several members of ALPA’s executive committee, who negotiated the scheme in the first place, are also in line to receive a payout totalling just over €2.3m, according to documents seen by Times of Malta. 

Key union figures stand to receive payouts ranging from €680,972 to €951,672. 

ALPA president Marco Lucia (right), vice-president Charmaine St John (left) and secretary Kristian Farrugia (inset). Photos: Facebook

Pilots’ early retirement package has long been a controversial issue.

Shortly after the agreement came into force, in early 2013, 20 Air Malta pilots were offered up to €450,000 each to step down, as the beleaguered airline sought to slash its wage bill.

12 of the 20 pilots took up the scheme, with ALPA later arguing that Air Malta needed to employ more pilots to make up for the shortfall.

Speaking in parliament in 2022, finance minister Clyde Caruana had described the early retirement scheme as a millstone around Air Malta’s neck, with the airline potentially facing a bill of over €100m if it attempted to remove the clause.