Air Malta’s losses rose from €4 million in March 2016 to approximately €13 million in the last financial year.

Although the ailing airline had yet to publish its financial results for the last two years, in recent days staff members were told about the “bleak financial situation” prior to crucial decisions unions needed to make in talks on a new collective agreement, sources said.

According to a five-year plan agreed with the European Commission in 2011, Air Malta was to make a full financial turnaround and return to the black by March last year.

In the first two years, the airline managed to reduce losses and keep to the plan, but then, in March 2014, it was announced that it had veered significantly from the targets.

Earlier this week Tourism Minister Konrad Mizzi confirmed that the annual results till March will show a loss. He said the airline aimed to reach break-even in the current year. 

The last published audited accounts, for the year ended March 2015, saw the airline posting losses of more than €16 million. At the time, then tourism minister Edward Zammit Lewis said its finances were under control and that the situation would be reversed by the end of the five-year plan.

No other accounts have been published since, despite legal obligations to do so.

Sources close to the trade unions said Tourism Minister Konrad Mizzi had conceded that the airline suffered a loss of €4 million by March 2016 which rose to €13 million within a year.

Acknowledging that the situation was “bleak”, the minister said the airline should manage to break even by next March if the unions accepted the new packages on offer, the sources added.

The measures to be taken include additional routes and aircraft

“We knew that the situation is not very good for the airline but we weren’t aware that, in the last year, we regressed instead of progressed, despite the sacrifices we had to make,” a senior trade union official said.

“Obviously, we have to be careful about what the minster is saying, because it is in his interest to make us approve what’s on offer without conceding to any more demands,” another official said.

Members of the Union of Cabin Crew will today vote on whether or not to accept the package offered.

Described by cabin crew as containing “sweet and sour medicine”, the package included pay raises for those who chose to stay on, together with stiffer working conditions and more sacrifices, payments of up €130,000 each for a minimum of 60 cabin crew to leave the airline on a voluntary basis and the option of a government job for those who wanted to change their career path, the union sources said.

If the conditions are approved, as they are likely to be, this will be the second collective agreement to be concluded with the airline unions after the one with the engineers.

READ: Air Malta to report loss till March, but expects break-even this year

Airline sources said that while ongoing talks with the General Workers’ Union over new conditions for ground handling staff were considered by the government to be “a formality”, discussions with pilots were still far from over, as their union already declared it was not satisfied with the offers on the table.

In a bid to surmount these obstacles, Air Malta officials are known to be meeting pilots individually to “explain” the offer.

Dr Mizzi came up with a new strategy for the airline, changing the direction taken by his predecessor and focusing on future growth, civil aviation industry sources said.

The measures to be taken include more routes, more agg-ressive pricing and additional aircraft for the airline’s fleet.

According to EU State aid rules, the airline cannot rely on any form of government funding.

ivan.camilleri@timesofmalta.com

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