Updated | Ryanair setting up fully-fledged Malta subsidiary

Updated at 10:30am with Konrad Mizzi's statement

Ryanair is set to open a Malta-based subsidiary that will start operating with six aircraft under the brand name Malta Air, MaltaToday has learnt.

The Irish low-cost airline’s subsidiary will have a head office in Malta and the operation will also include a fully-fledged engineering department.

Industry sources said Ryanair’s move was “imminent” and the company intended to increase the number of planes operated by Malta Air to 12 over the coming years.

This newspaper understands that talks are underway with Malta Industrial Parks to find a suitable location for a hangar on the airport perimeter.

Ryanair currently has six airplanes based in Malta, which operate on more than 60 routes. These aircraft will be transferred to the new subsidiary and given a new livery.

“Malta Air will be a low-cost carrier part of the Ryanair group,” the sources said.

The move will see Ryanair transferring to Malta the 300 crew members currently servicing its six aircraft.

“These workers will start paying taxes in Malta and the eventual expansion of Malta Air could see an additional 300 crew members make Malta their home in the coming years,” the sources added.

Ryanair’s subsidiary will be the second airline after Air Malta to be based in Malta, giving the low-cost carrier permanency on the island.

The decision to open a Malta-based subsidiary falls within Ryanair’s strategy to operate subsidiary companies in different jurisdictions. It did this in Poland last year, where Buzz operates on a Polish Air Operator’s Certificate, and in Austria this year, where Ryanair bought low-cost carrier Laudamotion.

Sources said talks between Tourism Minister Konrad Mizzi and Ryanair started around October last year.

“Ryanair had initially expressed an interest in Air Malta but the government shot down the idea, proposing instead that the Irish company open a subsidiary operating on a Maltese Air Operator’s Certificate,” the sources said.

Ryanair warmed up to the idea and the government set up an innocuous company, MAAT Ltd, last March to initiate the process to obtain the AOC.

A search on the registry of companies shows that MAAT is a subsidiary of Malta Air Travel Ltd, a government company set up last year to buy Air Malta’s lucrative airport slots.

MAAT has been going through the motions of obtaining an AOC from the Civil Aviation Department. MaltaToday understands that throughout this process, the principle interlocutors were personnel from Ryanair.

“The Tourism Ministry offered Ryanair to obtain the AOC through a purposely set up company, which will then be transferred to the low-cost airline lock, stock and barrel once the process is complete,” the sources said.

Ryanair will then rebrand the company as Malta Air with the Maltese government holding a single preferential share in the low-cost subsidiary.

“The share will protect the brand name Malta Air and ensure it will always be tied to a Maltese AOC,” the sources said.

Malta Air will operate on the routes currently serviced by Ryanair. Aviation industry observers noted that the move is unlikely to impact Air Malta.

“Contrary to Ryanair, the national carrier operates to main airports in Europe, the Middle East and Africa, it offers business class and cargo services and is expected to expand its route network to Ghana and Mumbai in India. These offerings distinguish Air Malta from Ryanair and other low-cost operations,” the sources said.

But the agreement with Ryanair also includes the transfer of some 60 aircraft the company operates in Germany and Italy to the Maltese aircraft register. This has nothing to do with Malta Air but is expected to boost the standing of Malta’s nascent aircraft register, according to industry sources.

Tourism Minister Konrad Mizzi confirms talks with Ryanair

In a statement on Sunday morning, Tourism Minister Konrad Mizzi confirmed that discussions with Ryanair for the establishment and expansion of a Malta based airline are at an advanced stage. Ryanair already operate 61 routes from Malta.

Mizzi said that, “once concluded this  ill be an innovative partnership which forms part of our vision to develop Malta into an aviation hub in the heart of the Mediterranean – helping to secure a prosperous future for our children, and theirs. We had a tough, business-focused negotiation – which you’d expect from a global brand like RyanAir - but we are working to secure a fantastic deal for Malta. Just as importantly, we’ve built a bond of trust with a world-renowned company, and demonstrated that we are open for business, and open to the world.”

Mizzi also highlighted that the "government will continue to invest in Airmalta which is growing and focusing on a different business model and market offering."