British transport operator Arriva will be leaving Malta by the first quarter of next year under a transition agreement being finalised between the company and transport authorities, The Sunday Times of Malta has learnt.
Transport Malta and Arriva management are currently negotiating the terms of the deal through which the authority would take over the company and a portion of its substantial debts in a nominal sale.
The authority is then expected to issue a call for expression of interest to re-award the licence. The details of the deal are still being ironed out but there is agreement on the broad terms.
It averts the option of the company filing for liquidation – a messy prospect for both Arriva and the government.
Since taking on the public transport system in 2011, Arriva’s service has been riddled with problems, despite investing in the training of drivers and new environmentally-friendly vehicles, which replaced the exhaust-belching yellow buses. Arriva was meant to run the public transport system until 2021.
It would have left the government with a mess
Arriva Malta has reportedly lost some €35 million since it started operating and is looking at ending this year with losses approaching €25 million.
On top of this, the government had been demanding an overhaul of the network, which would have added one million kilometres to Arriva’s current journeys and the replacement of the company’s 68 bendy buses, in the wake of three incidents where the engine compartments had caught fire.
These changes would have added to the financial troubles of the company and while the government was prepared to increase the subsidy – which had already gone up from €6.2 million to €8 million per year by July 2010 – there was disagreement over the extent of the increase.
In the event of liquidation, the company’s assets, including the buses would have been frozen and likely sold off to pay the company’s debts.
“That scenario would have benefited nobody. It would have left the government with a mess, having to figure out how to keep the public transport system going, and the Arriva group with an exit that might have embarrassed its German owner (the transport giant Deutsche Bahn),” a Transport Malta source told The Sunday Times of Malta.
Arriva Malta yesterday said discussions were in the final stages of negotiations and that the priority for the company was to ensure the best outcome for all stakeholders.
“We understand this is a difficult time for our employees, and we appreciate how challenging the past few months have been for them. We would like to thank all involved for their patience during this time but while negotiations remain ongoing it would not be appropriate to speculate on the detail of the outcome,” a spokesman said.
We understand this is a difficult time for our employees
Last Monday, Transport Minister Joe Mizzi gave a tentative indication of the state of play with Arriva when he said that talks over the new routes had been “exhausted”.
However, the statement created more uncertainty particularly when Arriva later insisted that talks had not been concluded and that any announcement would be made in due course.
The talks remain ongoing but they concern the terms of the company’s exit, according to sources.
This newspaper reported last week that one of the leading private bus and coach operators, Paramount Coaches, has already declared its interest in taking over the service should Arriva exit.