Finance Ministry welcomes EC official investigation of Air Malta aid

The finance ministry has welcomed the publication of the European Commission's official investigation of state aid to Air Malta as a positive step.

All recent airline restructuring plans have gone through the same process, namely Cyprus Airways in 2006, Alitalia in 2008, Austrian Airlines in 2009, Malev-Hungarian Airlines in 2010, and Czech Airlines in 2011.

"The ministry is pleased that this important stage has been reached. It means that the approval process of Air Malta's Restructuring Plan by the Commission is on schedule.

"As one can see in the Official Journal today, the European Commission describes the background of the Air Malta case, the aims of the restructuring plan, including the main revenue and cost initiatives, as well as the importance of Air Malta to the Maltese population and to the country's economic well-being," the ministry said.

"Moreover, the Commission identifies those areas of the restructuring Plan that it feels raise EU competition issues, asking any interested parties to submit their views also on these elements. Any party can act as an interested party, submitting its legal arguments framed in the context of EU competition law, accordingly. Any comments have to be submitted within one month, meaning that the deadline for comments is 21 March 2012."

The finance ministry together with the Permanent Representation of Malta to the European Union, and Air Malta will be answering to the formal investigation phase of the European Commission's approval process.

The restructuring of Air Malta commenced in November 2010, and with increasing pace, the airline has now put in place the foundations for its recovery.

Key restructuring milestones since November 2010 have included the: appointment of a new management team with specific airline turnaround experience; preparation and lodgement of a Restructuring Plan with the European Commission; sale of property assets; a financing plan with the government and the banks; union agreement to change work practices and redundancies of 500 employees; disposal of loss-making operations; and over 160 internal projects.

The airline has also moved ahead with the voluntary redundancy schemes while filling key vacant posts in the new organisational structure.

Critically, Air Malta is embarking on a cultural transformation and business re-engineering process to reposition the airline and change it into a modern carrier able to successfully compete in the evolving aviation business. Overall, the restructuring process is aiming to increase the airline's revenue by €30 million and decrease costs by the same amount; this to allow to return to profitability by 2015.