Accountants and auditors have been refusing to sign off on Air Malta’s accounts since 2019, eight years after the company entered negative equity territory.
And over 16 years it racked up a total of €258 million in losses.
In an attempt to save itself, the airline sold off all its assets – except one – and is now hanging on a brittle line that could snap, sending the airline into bankruptcy and all its 900 employees out in the cold.
The airline’s executive chairman, David Curmi, who took over in February 2021, said on Friday that just like a doctor on an operating table, he had used all his expertise to stop the haemorrhage.
He was giving an overview of a four-year strategy, presented to the European Commission, to get the airline out of the red zone.
One of his first decisions was to stop flights that were making the biggest losses. Although every route was running at a loss, some were worse than others, so he cut 20 of the 40 routes and saved the company €44 million. The network was contributing to 47 per cent of the losses, he said.
Between 2005 and 2020, Air Malta sold assets worth €209 million, including Selmun Palace Hotel, Holiday Inn, an insurance brokerage firm and its landing rights in Heathrow and London Gatwick airports.
Commercial department larger than that of Easyjet's
Another problem was that Air Malta’s workforce was so oversized that its commercial department was bigger than that of the much larger Easyjet.
The last state aid allowed by the EU in 2012 saw €130 million pumped into the airline. However, these soon vanished as costs kept climbing. Since 2010, costs have always been greater than revenue, he said.
Non-core operations, such as ground handling, were costing the airline €12 million alone.
The pandemic dealt a big blow, with the airline receiving over 300,000 requests for refunds, totalling €32 million, and issuing 80,000 flight vouchers, equivalent to €12 million.
€10 million a year to lease and maintain each plane
Its eight-plane fleet was costing €10 million a year each to lease and maintain.
A strong marketing campaign grew the chartering business from almost a standstill in 2020 to €3.9 million last year.
Turnaround expected in 2024 or 2025
Curmi said that according to projections, the airline industry expected a turnaround in 2024 or 2025.
But Air Malta would not copy the low-cost airline model because such airlines' costs were so low it could not compete with them.
Instead, it would continue to offer exceptional service on profitable routes and fly to legacy airports, Curmi said.
He said a change in the livery – something trivial – would save the airline a lot of money: planes will remain white with a red and blue tail.
Meanwhile, apart from no longer handling baggage operations, and operating from different bases outside of Malta, the cabin crew and pilots will see changes to their flying hours.
Their conditions will be brought in line with other airlines, where pay is linked to how much time you spend flying, Curmi said.