Air Malta insiders balk at millions in forecast losses

Air Malta’s financials may be about to experience renewed turbulence, with the departure of trusted government man and airline CEO Louis Giordimaina under a cloud of €30 million in losses forecast for March 2015.

The figure has not been denied by tourism minister Edward Zammit Lewis, who on being stepped up from parliamentary secretary, has seen the departure of Giordimaina, as well as Air Malta chairman Ray Fenech, and that of Malta Tourism Authority chief Josef Formosa Gauci.

Zammit Lewis on Friday did not confirm claims that an embittered Giordimaina had been left out of company board meetings.
“Mr Giordimaina stepped down from office due to personal reasons as stated in his resignation letter. People moving on is a reality that needs to be dealt with by every organisation.”

“Sometimes people decide to leave government altogether and on other occasions they decide to stay on in a different role, such as Formosa Gauci did by staying on as a consultant in the tourism ministry,” the minister said.

In October, the airline will be expected to present the latest figures for the year ending March 2014.

In March 2013, the second year of Air Malta’s five-year restructuring, the airline reported an operating loss of €13.7 million, down from €29.7m in 2011.

But Zammit Lewis refused to confirm or deny the forecast €30 million losses in 2015 – the year in which the airline should be gearing up for breakeven.

“This government inherited a company which was in its third year of a restructuring process that had been negotiated with the European Commission by the previous administration. Air Malta has continued to abide by the process as set out in this restructuring plan.

“The government is fully determined and working hard to strengthen the internal structures of Air Malta and to ensure that the company returns to commercial viability as soon as possible.

“The government is constantly ensuring that Air Malta is also being pro-active and exploiting commercial opportunities that may arise.

“Whatever the case, our focus is on implementing the replacement process without losing sight of our strategic objectives: maintaining our momentum in the tourism industry and turning Air Malta around.”

While Zammit Lewis said that the hunt for a new CEO is already underway, a new development MaltaToday got wind of at the weekend was that chief financial officer Clare Brown has also left her post, five months after her appointment.

In February 2013, Brown was brought in as interim head of financial control, later designated as head of financial ‘transformation’. But following the resignation of Nick Xuereb, the chief financial officer who worked alongside chief executive Peter Davies and chief commercial officer Philip Saunders, Brown was made ‘acting’ CFO. She is believed to have left some time in June-August.

Air Malta went through a massive restructuring imposed by the EU after the government saved it from bankruptcy in 2010 with a €52 million loan. Two years later the EU approved €130 million in State aid on condition that the airline was restructured. Air Malta almost halved its workforce, reduced the number of planes in operation and cut capacity.

Labour, critical of the appointment of aviation expert Peter Davies on a €500,000 annual salary, designated former Enemalta chairman Louis Giordimaina as his Maltese successor. In the process however, it suffered the loss of Ray Fenech as chairman, and replaced him with former General Soft Drinks general manager Maria Micallef.

Under a €230 million restructuring plan mandated by the European Commission, Davies managed to stabilise Air Malta’s balance sheet and halve the airline’s losses from €78 million in 2011 to €30.9 million in 2013. He was tasked to see the airline breakeven by 2016, but his €500,000 contract expired in 2014.