Air Malta redundancies could near €60 million for 345 employees

Air Malta’s bill for severance packages is edging close to €60 million after a total of 345 employees out of 572 applied for the government payouts.

On 14 January, government announced it would create a voluntary employee transfer scheme in a bid to cut Air Malta’s workforce by half and save €15 million per year in wages as part of a restructuring exercise.

But while staff had been earmarked for early termination in August, they will now leave the national airline by 31 December, 2022.

With the airline enjoying healthier summer loads as tourism picks up from the pandemic, more workers have had to be retained for service despite plans by the finance ministry to release 600 airline employees into the public service.

Around €65 million had been included in the 2022 Budget for ‘national airline restructuring assistance’, which could reflect the expected assistance the European Commission in Brussels will allow by way of state aid.

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.

The airline’s current complement of around 900 had to be reduced to around 420 with workers being offered alternative employment with government.

READ ALSO: Air Malta staff offered voluntary retirement scheme as transfers moved to December

Finance minister Clyde Caruana had said the cost-cutting plan that will see the airline ridding itself of ground handling operations, was independent of the amount of state aid the European Commission will allow.

Brussels has not yet pronounced itself on the amount of state aid the government will be able to pump into the airline.

Restructuring intends to give the airline “a fighting chance” to survive with redundancies expected to be completed by the first half of this year, Caruana had said.

But the Malta Employers Association dubbed the severance packages as “the most obscene in Malta’s industrial relations history”, accusing the government of squandering taxpayers’ money to resolve a mess of its own making.

“Companies and employees cannot take the government’s appeal for tax compliance seriously when it is distributing millions of their taxes to a privileged few, with such handouts amounting to more than an average worker saves in his or her lifetime,” the MEA said.

Air Malta is currently being restructured to dramatically reduce its headcount and overheads.

Air Malta could also be forking out thousands in payments to pilots who retire in line with a collective agreement clause that government may ‘buy out’.

The collective agreement clause states that individuals aged 55 or more, who have been pilots with the national airline for more than 25 years, would be paid two-thirds of their salary each month until they retire.

Industry sources have told MaltaToday the clause allowing pilots to be paid two-thirds of their salary, while not actually working, is costing the airline “a lot of money”.

There have been talks between the airline and the pilots’ union in a bid to have this clause removed with sources saying that the government is even considering “buying it out”.

Air Malta is passing through a painful restructuring process as government seeks the European Commission’s green light to shore up the airline.

Pilots were excluded from the severance package deal since Air Malta had sacked 69 pilots in the summer of 2020 after talks with the Airline Pilots Association broke down. The move came after a protracted stand-off between the airline’s management and pilots after the latter refused to accept a social wage of €1,200 per month in the wake of the COVID-19 crisis.