Reduced losses ‘positive’ but Air Malta’s restructuring success yet to be determined

Tourism Minister Karmenu Vella said it was "positive" that Air Malta had reported less operating losses than last year, but the fact that losses were still made was worrying, he added.

The national airline yesterday presented the financial results of its second year in its EC-mandated restructuring process, halving operating losses from €30 million to €13.7 million in March 2013, and registerring an operating profit of €6.3 million in the first six months of the current financial year.

According to the minister, it was however, still too early to say whether Air Malta was on track for a 2016 breakeven.

"It is very difficult to say what will happen by the fifth year of the plan," Vella told MaltaToday. "It is positive that losses have been reduced but one cannot ignore the losses either."

He warned that Air Malta had to pay special attention during 2014 and 2015. For 2013, the airline was already bracing itself for losses, albeit reduced.

"The success of the restructuring plan, and whether Air Malta will return to profit or breakeven, can only be determined in the fourth year of the restructuring programme."

Vella also said the government had taken a conscious decision to retain the same management responsible of the implementation of the restructuring process: "In no way did we want to interfere or hinder the restructuring plan and we therefore retained everything as was."

Asked whether there were any plans in the pipeline for an eventual privatisation or partial privatisation of the airline, the tourism minister was blunt: "the privatisation card had been on the table for years" - suggesting that the option was still on the table.

Plans to privatise Air Malta go back as far as 1994 when former Air Malta chairman Joe Tabone suggested this in a letter sent to then finance minister George Bonello Dupuis. Last year, former Air Malta chairman Louis Farrugia told an MHRA meeting that the airline could only expand through private capital injections.

"It is too early to say anything, but one cannot exclude anything," Karmenu Vella said, adding that while he was confident that Air Malta will be able to recuperate its finances, he still believed it will require more finance.

"And if Air Malta would require further injections, we would have to look at all the options," he said, pointing out that under EU regulations it could only recieved state aid once every 10 years.

However, Air Malta chairman Ray Fenech denied the company was looking at private investment and noted that he will commence talks with airline CEO Peter Davies over the renewal of his contract in the coming weeks

The tourism minister confirmed that no decision has yet been taken on whether to extend Davies's contract or not which expires in March 2014. "No decisions have yet been taken," he said when asked whether Davies's contract will not be renewed. "For all I know it could be Davies himself who decides to leave."