Air Malta’s CEO warns of ‘damaged brand’ if pilots strike

Air Malta’s CEO Peter Davies has warned pilots that a planned industrial action to ground aircraft would be “totally irresponsible”, in a letter he sent to pilots in reaction to a blogpost appearing on food website planetmona.com.

The blogpost features 10 demands by Airline Pilots Association president Dominic Azzopardi, each of which were answered by Davies in his letter to the 140-odd pilots’ workforce.

Air Malta also warned in a judicial protest filed today against ALPA that it may have to permanently stop operations if a threatened pilots' strike goes ahead. The airline said that should its flights be stopped by the strike, it would incur enormous costs and there would be a clear and imminent danger of it having to stop operations.

ALPA has threatened industrial action following the leak of an Ernst & Young report which showed that some 57 pilots were earmarked to be among the 511 workers facing redundancy through the restructuring of Air Malta.

“It has already started to cause us financial harm via loss of bookings and people deciding not to come to Malta during the summer,” Davies said of the proposed strikes. “In fact, if action proceeds, the gains that you say you are seeking will be outweighed by the short and long term losses to the airline’s revenue and reputation.”

Davies warns that Air Malta will be “a damaged brand” and that tourists would simply go to other places. “There are ways to go about implementing change and this [industrial action] is not one of them.

ALPA's 10 demands and Davies's answers

1. MIA must issue a 3-year moratorium on charges

Davies says that ALPA’s demands for government to compensate MIA on a 3-year moratorium to Air Malta would be “pure state aid completely in breach of EU rules”. Davies also reveals that airport charges form the bulk of MIA revenue - 64% - “forgoing MIA’s revenue for three years goes beyond any realistic demand... we are progressing on substantial negotiations with MIA.”

2. All executive level management up must leave

“Already a number of high-ranking key management members have gone are being be replaced,” Davies says without mentioning names. But “wielding the hatchet indiscriminately across the board is grossly irresponsible to say the least, verging on the vindictive.”

3. Cargo charges need to be revised and contracts should reflect what agents are selling it at

Davies says he has 15 years’ experience at board level at DHL. “We have brought in a cargo specialist… no area of the business will escape his review.” But he then says that thinking that Air Malta will achieve its turnaround solely by revamping its cargo business “is a grossly misstated claim.”

4. The Air Malta website needs a complete revamp now and must include cargo bookings

Website is already “state of the art internet booking engine” and is being reviewed for fine-tuning, Davies says. “Restructuring is much, much deeper than that.”

The CEO says they are implementing spot cargo and use website to direct people to call Air Malta to book cargo, but “cargo airline industry is far off from reaching the stage of booking cargo on the web.”

5. Courier contracts need to be re-written to reflect the financial reality

“Courier contracts are included in the cargo audit... This will be an ongoing exercise as Air Malta’s rates need to keep on reflecting market reality.”

6. Revision of all contracts pertaining to aircraft lease

Restructuring includes renegotiating of all contracts, Davies says, including lease and maintenance of aircraft. “We are already reviewing the top 20 contracts.”

7. Revision and rewriting of all major contracts which have been sinking the company or years

As above, but Davies says outsource contracts have benefited the airline – “each contract was audited to confirm that the benefits which the airline targeted were indeed achieved.”

8. Pilots must be involved in the top management of the company: we have many members whose knowledge goes over and beyond flying planes

Davies here says management is the responsibility of “management with valid qualifications, experience and capability” – instead he proposes being open to feedback from the institutionalized Works Council and Consultative Representative Council.

9. Top management needs to be fully loyal to the good of the company not to private interests

“Any founded breach of such trust will be dealt severely, if necessary also dismissal,” Davies says – but then adds that company employees who do part-time work must get the approval of the company.

10. We know why and how confidential information we have had no access to is being leaked. We shall react accordingly

“If this is the case and you can support it with hard evidence, it serves no purpose withholding it from us. Otherwise we have to treat it as just allegation.”

In a seemingly lighter tone, Davies recalls that the new management team and project resources and board have been in place only recently. “Within a short period of time gains will be made in areas such as contracts,” he writes. “We have already taken action on waivers and favours and have recast the budget for 2011-13, reducing the deficit by some €10 already.”

Closing off his letter, Davies tells the pilots: “You must give us time to implement our plan.”