Etihad talks still on the cards

Talks with Abu Dhabi-based Etihad Airways are still ongoing, according to a senior government spokesman who was talking to MaltaToday. Revelations that Etihad were the favoured partners for Air Malta were first reported by MaltaToday in November last year. 

The spokesman said the discussions were centred around some of the strengths of Air Malta, such as the country’s location, slots, assets in cargo handling and the value of its skilled staff. 

The spokesman, on condition of anonymity, said the best brains were being used in the negotiations and they included professionals from the local and international market. He also said that some very well respected local legal and audit firms were involved.

Etihad Airways are seeking to inject equity in the ailing Air Malta – the Middle Eastern airline prides itself in rescuing struggling airlines.

Etihad sees itself as a ‘rescue investor’

Tourism minister Edward Zammit Lewis has said that any deal will see the government retain its majority shareholding in the national airline.

Air Malta is in the final months of a five-year restructuring plan that the previous government had agreed with the European Commission in 2012 in return for the latter’s approval of around €130 million in state aid. 

Over the past five years, the carrier was forced to trim its staff, reduce its number of operating jets, and cut capacity. The plan should have seen the company return to profitability this year but has fallen way short of its restructuring targets.

A deal with Etihad could see Air Malta retain services such as cargo handling while overhauling its software and booking systems. Apart from code-sharing, a partnership agreement could see Air Malta gain from flying to Etihad’s Abu Dhabi hub, where the company can then transfer passengers to and from a range of destinations to which it has not previously had convenient access.

Etihad is not new to such agreements – last year it saved Alitalia from bankruptcy, reinforcing the Gulf airline’s reputation as a “rescue investor” for airlines in difficulties.

In December 2014, Etihad bought 49% of the loss making Alitalia in a €1.76 billion rescue plan, giving it access to Europe’s fourth-largest travel market and 25 million passengers.

Etihad plans to return Alitalia to profitability by 2017 and the deal has seen the fallen Italian giant expand its operations outside Europe. Following its link-up with Etihad, Alitalia launched new direct long-haul flights to Asia and the Americas.

Etihad, which has eight equity partnerships including Alitalia, has expanded its wider network to 400 destinations, allowing the youngest of the three major Gulf carriers to compete with Dubai-based Emirates and Qatar Airways.

The cash-rich Abu Dhabi airline, which has minority stakes in Air Serbia, Air Berlin, Ireland’s Aer Lingus, Virgin Australia and Air Seychelles, wants to boost its presence in the European market, where it lags behind its regional competitors and flag carriers such as British Airways and Lufthansa.