The com­mon ground be­tween the PL and PN

Malta Independent - - NEWS -

De­spite the fact that the govern­ment and the op­po­si­tion ap­pear to be at log­ger­heads over the fu­ture route of the na­tional air­line, there nev­er­the­less ap­pears to be com­mon ground of a sort.

For starters, both the govern­ment and the op­po­si­tion are in agree­ment that the air­line is in need of a strate­gic part­ner. They are also both of the opin­ion that a share of­fer­ing for the air­line could be­come a re­al­ity.

That the two par­ties are more or less in agree­ment on these two main as­pects for the fu­ture of the air­line is pos­i­tive, the only dif­fer­ence is in the tim­ing.

It is more than clear that the air­line is in need of a strate­gic part­ner. Not only is this the di­rec­tion in which much of the global in­dus­try is head­ing, but, for an air­line the size of Air Malta and with the air­line’s small fleet, the rop­ing in of a larger strate­gic part­ner makes a great deal of sense.

But is an im­me­di­ate ini­tial public of­fer­ing re­ally the way to go?

Ac­cord­ing to the PN, there should be an ini­tial in­vest­ment into Air Malta from lo­cal in­sti­tu­tions and agen­cies, through a trans­par­ent process that lim­its any lo­cal pri­vate share­hold­ing to no more than a 10 per cent stake.

More­over, the PN sug­gests that any in­vestor would be held to a lock-in obli­ga­tion so as to avoid share spec­u­la­tion and in­vestors sell­ing off their shares for profit within short time­frames.

The PN also in­sists that share op­tions should be given to Air Malta work­ers and that, af­ter a pe­riod of two years, more shares should be sold to the public.

The Op­po­si­tion leader has been re­peat­ing for months now that Air Malta should be made public, and that the air­line’s em­ploy­ees and the

Ed­i­tor’s pick

Mal­tese public at large should be given a chance to buy into the air­line.

But, as mat­ters cur­rently stand, there is no in­vest­ment case what­so­ever for Air Malta to be floated on the stock ex­change and even if in­vestors could some­how be tempted to in­vest in a com­pany with neg­a­tive eq­uity such as Air Malta, the com­pany’s fi­nan­cial predica­ment would not even qual­ify it for a list­ing of its shares.

The PN’s sug­ges­tion that the air­line should first get its fi­nan­cial house in or­der be­fore of­fer­ing any IPO is a no-brainer as the air­line would not even qual­ify for a Malta Stock Ex­change list­ing given its cur­rent fi­nan­cial sta­tus.

Even if it were to qual­ify, an in­vestor would need to have more in­cen­tive than pure pa­tri­o­tism to in­vest in the air­line. A fi­nan­cial anal­y­sis of the op­tion com­mis­sioned by the govern­ment last sum­mer found that there must be a com­pelling case made as to why an of­fer­ing of govern­ment shares in Air Malta, through an ini­tial public of­fer­ing, would con­sti­tute an at­trac­tive in­vest­ment propo­si­tion to the public in­vestor since any com­pany that is in neg­a­tive eq­uity ter­ri­tory is hardly the best in­vest­ment op­por­tu­nity for in­vestors.

Air Malta has been sus­tain­ing sig­nif­i­cant losses for a num­ber of years and it is public knowl­edge that the air­line re­quired a res­cue plan to al­low it to merely sur­vive, let alone turn any kind of profit.

On this ba­sis alone, it would make lit­tle, if any, sense for an in­vestor to place any money in such a com­pany. Un­less one can make a com­pelling case for sig­nif­i­cant fu­ture re­turns on in­vest­ment, the past does not seem to pro­vide much so­lace for po­ten­tial in­vestors.

There is no busi­ness case that can be made for float­ing and sell­ing to the gen­eral public shares in a com­pany that has neg­a­tive eq­uity and as such there is hardly any in­vest­ment case to be made to the mar­ket.

The PN’s other sug­ges­tion that the air­line be given two years be­fore any such IPO would be made also ac­counts for the MSE’s list­ing rules, which stip­u­late that for a com­pany to be el­i­gi­ble for a list­ing of its shares it is re­quired to have share­hold­ers’ funds less in­tan­gi­ble as­sets of a min­i­mum of €600,000.

Air Malta clearly does not qual­ify for a list­ing as mat­ters stand, with the air­line still be­ing some €43 mil­lion in the red.

In essence, the PN, de­spite hav­ing given a thor­ough ex­pla­na­tion of its vi­sion for Air Malta, has not pro­posed any­thing that is even re­motely doable in the short-term, and pos­si­bly not even in the medium term.

But in the mean­time, an ur­gent so­lu­tion is re­quired.

The govern­ment, for its part, stressed yes­ter­day that all op­tions, in­clud­ing a fu­ture public of­fer­ing, are still on the ta­ble.

What would help mat­ters along su­perbly would be for the govern­ment to stop hold­ing its cards so close to its ch­est and to open up about its real plans for Air Malta and about the real state of ne­go­ti­a­tions with Al­i­talia as a strate­gic part­ner.

Air Malta is, af­ter all, the na­tional air­line, and as such it re­quires a na­tional so­lu­tion in the na­tional in­ter­est. The fact that there ap­pears to be some form of com­mon ground about the way for­ward for the na­tional air­line is heart­en­ing, but the con­tin­u­ous po­lit­i­cal over the fate of Air Malta is any­thing but pro­duc­tive.

Newspapers in English

Newspapers from Malta

© PressReader. All rights reserved.