A new national airline will make its maiden flight on March 31 next year, replacing the current flag carrier which will operate its last flight on March 30, Prime Minister Robert Abela said on Monday.

He said agreement had been reached with the European Union on the transition to the new airline after the European Commission earlier refused to accept a government request for fresh state funding for the carrier.

Times of Malta reported earlier this year that the government had been requesting the Commission to authorise a state cash injection of some €290 million. 

Same planes, fewer routes

Abela said the newly recapitalised airline will retain Air Malta’s current fleet of eight Airbus A 320 aircraft, even though the European Union initially wanted a reduction. It will fly to 17 destinations, discontinuing routes which were unprofitable. Air Malta operated to 37 destinations as recently as 2019.

The new airline will fly to Amsterdam, Berlin, Brussels, Catania, Dusseldorf, London Heathrow and London Gatwick, Lyon, Madrid, Milan, Munich, Paris, Prague, Rome, Vienna and Zurich. Plans are in hand for a new service to Copenhagen but other services - Palermo, Naples, Nice, Geneva, Lisbon, and Tel Aviv will be discontinued.  

He said the new airline would be more efficient, achieve a higher passenger load factor and achieve profitability in about two years' time.

"We cannot be dependent on foreign airlines, we need to retain control of our national airline which can meet Malta's needs while making financial sense," Abela said. 

Existing workers to be kept

Abela, accompanied by Finance Minister Clyde Caruana, said Air Malta’s workforce of some 400 will be re-employed by the new airline.

Air Malta over the past two years slimmed down its workforce from just over 1,000, with the offloaded workers being offered generous golden handshakes or absorbed in the public service with the same pay.

As a result, Caruana said, the airline’s wage bill had been brought down to €22m from the previous €48m.

Asked if the workers would retain their current pay, Caruana said pay would be according to the international market but did not elaborate.

On existing early retirement schemes, Caruana explained that the government cannot do away with the schemes just yet. Pilots and cabin crew will have the chance to opt for early retirement within the next four years until the schemes are phased out for good.  The schemes will cost the government €90m if all eligible persons apply for them.

Pilots who opt for the scheme will be banned from working with the government or the public sector for life and cabin crew who opt for it will be banned for six years.

"Going forward there are no more early retirement schemes," Caruana said. "It has to stop." 

Government to spend €350m on new airline

He said the government will be investing €350 million in the new airline, of which €300m will go towards buying three of its aircraft, which are currently leased; for the purchase of London and Gatwick airport slots from the government, and to buy hangars and surrounding property from Air Malta. The remaining €50 million will be working capital.

On the airline’s name, Caruana explained that the company name will change from Air Malta to KM Malta Airlines plc.

But since the Air Malta brand name is owned by the government, the new airline would be able to rent it after a competitive process and therefore its aircraft would still fly under the Air Malta brand and the aircraft livery would continue to carry the Maltese Cross.

Partial privatisation planned

Caruana said that while the Malta government would continue to own the majority holding of the new airline, the government intends to either issue shares in the new company or seek a strategic partner in a measure that would also ensure that there was good governance.  

Refunds or rebooking for booked passengers

Caruana explained that Air Malta will fly its last flight on March 30 and the new airline will resume on March 31. Refunds will be offered from November 1 for those who booked Air Malta flights beyond March 30. Booking for flights with the new airline after March 31 will go on sale on December 1.  

Those who accumulated air miles will be paid for them as from February.

Caruana said the focus of the new airline would be on efficiency. The aircraft will be utilised for some 12 hours instead of the current nine, and seat load factor will be raised. “Every flight has to make a profit, every flight must be full,” Caruana said.  

MHRA: Connectivity remains key

The Malta Hotels and Restaurants Association (MHRA) in a reaction to the press conference said it had always been consistent and vociferous that Malta needs its own national airline as connectivity brings a myriad of critical social and economic benefits and Malta could not allow its lifeline to be solely in the hands of foreign operators.

"In this light, the new Malta airline replacing Air Malta must be viewed as a unique opportunity to learn from past mistakes and avoid repeating them. The new airline must focus on its mission with nothing related to partisan politics interfering in the process. Indeed, MHRA believes that the next step now should be that of having private participation in the new shareholding structure.”

It hoped that the transition will be as seamless as possible and that any lost connections would be made up for by other constructive and effective initiatives.

“The new national airline brings hope for a better future for the travel and tourism sector in Malta, and all stakeholders along with the Government must do their utmost to protect this unique chance to do things differently and better,” MHRA president Tony Zahra said.

Opposition demands parliamentary debate on Air Malta

The government’s announcement on Air Malta also came up in parliament where the Opposition demanded an urgent debate.

Prime Minister Robert Abela said the government had advised that he and the finance minister would deliver a statement and the Opposition could ask its questions and make its views heard.

However the government saw no problem to holding a debate on a future date, where it would explain its ‘historic reform’ to correct the PN’s sins in Air Malta.

After a suspension of the sitting the Speaker ruled against an urgent sitting it was agreed that a debate would be held after the statement, with the sitting extended to 9pm.