Air Malta plans to cut unprofitable routes and needs to slash its payroll costs further to improve its financial health, executive chairman David Curmi has said.
The under pressure national airline has been "dismantled" by the pandemic and its effects have been "very difficult to overcome" Curmi told a tourism industry webinar on Tuesday.
He revealed the airline is preparing to drop routes which are "unprofitable" and plans to instead focus "on core destinations". He did not detail the routes to be cut nor give any indication as to how many would be shelved.
An Air Malta spokesperson later confirmed that the organisation would focus on the UK, France, Germany and Italy for "the immediate future", with routes and frequencies to pick up in the future.
Air Malta, which has already cut salaries and made hundreds of pilots and cabin crew redundant, will have to reduce payroll costs further to strengthen its balance sheet.
Curmi revealed the €50 million payroll was a huge cost for the airline.
“We cannot run this airline on such a payroll and we will be taking the necessary actions in this regard,” he said, without going into any further details.
According to its website, Air Malta offers 33 routes, but these are much reduced due to the pandemic's impact on air travel.
Curmi said that despite the challenges, the airline has continued to operate to fewer destinations and was one of the only forms of connectivity during the peak of the pandemic.
But he said that Air Malta planes are leased at very high rates, where one aircraft costs around €10 million to run. “We currently have eight planes, therefore we see a cost of €80 million.”
When asked what must be done to safeguard Air Malta, Curmi said that some "bold decisions" must be made and the airline will continue working closely with stakeholders such as the government, MHRA and Malta Tourism Authority (MTA).
He said that the airline is in discussions to ensure that by 2024 Air Malta would replace older planes with newer ones which would be more cost efficient and also save fuel bills by 20 per cent.
“The key goal is to safeguard Air Malta, and that means we must think in terms of efficiency, cost reductions and also increasing revenue," he said.
Curmi was speaking during a webinar held by the Malta, Hotels and Restaurants Association to assess how the pandemic has affected the tourism, hospitality and travel scenario on Tuesday.
Tourism Minister Clayton Bartolo also addressed the webinar, saying that it is too early to predict whether the leisure and hospitality sector will be back to business by summer.
“Our aim is to be back to business as soon as possible, but we do not want to make similar mistakes which happened in the past. We are in constant discussions with health experts on measures to keep the industry going,” he said.
He said the ministry will soon launch a ‘Reactive Strategy’ focussed on rebooting tourism, which is different to the 10 year tourism strategy launched back in January.
He did not go into further detail of the strategy but that schemes will be announced soon.