Air Malta plan foiled by State Aid rules

A plan by Finance Minister Clyde Caruana to have some 600 employees at the loss-making Air Malta transferred into the public service and public sector, was not possible to effect without breaching EU rules on state aid.

Government sources said the writing had long been on the wall, well before Caruana’s declarations on the national airline’s uncertain future back in January.

Effectively, putting 600 workers on the State payroll would have been challenged by the European Commission as an act of state aid, a view long held by top civil servants who have seen countless Labour ministers fumble on Air Malta.

That same view was repeated to the Labour administration as it became apparent that the voluntary employee transfer scheme was falling victim to a pincer movement of circumstances: on the one hand, the post-pandemic recovery in summer tourism necessitated that Air Malta retain more staff than it envisaged during these months; on the other hand, the government was hard-pressed in finding suitable public sector and public service positions that paid the transferred Air Malta workers their same salaries.

According to the same government sources who spoke to this newspaper, the Labour administration was warned that a mismatch of salaries inside the public service was a direct invitation for industrial confrontation.

“Placing transferred Air Malta workers in some civil service position with long-standing employees paid less than they were, was going to be problematic to the government,” sources told MaltaToday.

The problem was also apparent when both former ministers Edward Zammit Lewis and Konrad Mizzi guaranteed Air Malta pilots a government job at their same take-home pay, should Air Malta terminate their employment.

The Maltese government had to commit itself to the 2016 guarantee, for a job that lasts until 31 December 2022. The guarantee was a side letter to the collective agreement for ALPA.

Air Malta workers last week voted in favour of voluntary retirement schemes, believed to cost close to €50 million for Air Malta.

The VETS proposal, which was agreed upon with the General Workers Union, the Union of Cabin Crew, the Airline Engineers association, and the AAOC union, will offer €40,000 to those who have served up to five years; €80,000 to those serving 5-10 years; €120,000 for 10-15 years of service; €150,000 for 15-20 years of service; €180,000 for 20-25 years; €210,000 for 25-30; and €240,000 for those of over 30 years of service.

Air Malta staff aged 50 and over are eligible for an early retirement scheme if they have served 20 years and over, to be paid two-thirds of their total take-home pay, capped at a maximum €300,000.