Al­i­talia re­ports €200m loss in 2015, ex­pected to lose an­other €100m this year

Malta Independent - - FRONT PAGE - ■ Gabriel Schem­bri

Al­i­talia, the Ital­ian na­tional air­line with whom Air Malta signed a mem­o­ran­dum of un­der­stand­ing which will lead to ne­go­ti­a­tions aimed at the sale of 49% of the com­pany’s share, has re­ported a loss of more than €200 mil­lion for the year 2015. More­over, the com­pany which is 49% owned by Eti­had, is ex­pected to lose al­most an­other €100 mil­lion by end of this year.

Ac­cord­ing to Ital­ian news­pa­per Il Sole 24, de­spite the sale of shares to the gi­ant air­line com­pany Eti­had which con­trib­uted to a €194 mil­lion in­jec­tion and the low­est fuel prices in years, Al­i­talia still recorded a stag­ger­ing loss of €200 mil­lion. The news­pa­per noted that 2015 was also the ‘golden year for air trans­port’, but still, some­how, the Ital­ian com­pany man­aged to pile so much loss.

As for 2016, the ar­ti­cle states that loss this year could peak at a €100 mil­lion, which is far more than the pre­dicted €44 mil­lion which was what ex­perts had es­ti­mated.

Ac­cord­ing to jour­nal­ist Gianni Drag­oni, the Ital­ian na­tional air­line fails to com­pete with other air­lines from all over the globe. There was a par­tic­u­lar de­crease in the air­line traf­fic to low-cost air­lines.

The ar­ti­cle makes it clear that so far, these pre­dic­tions are only ru­mours and that one needs to wait for an­other month to see if these pre­dic­tions are true. Un­der­stand­ably, the ar­ti­cle men­tions Air Malta and the ne­go­ti­a­tions which might lead for the two air­lines to work hand in hand. It refers to Air Malta as “the com­pany which still sails in trou­bled wa­ters with a lim­ited cash flow.”

Drag­oni writes that the agree­ment be­tween Al­i­talia and Air Malta was sup­posed to be

con­cluded by end of July fol­low­ing a mem­o­ran­dum of un­der­stand­ing signed in April. The deal was now post­poned to Oc­to­ber, ac­cord­ing to the pa­per.

“The Mal­tese Prime Min­is­ter, Joseph Mus­cat, is rais­ing lots of doubt re­gard­ing this deal,” he writes.

The ar­ti­cle con­cludes by say­ing that while air­lines from all over the globe are fi­nally en­joy­ing a good year, com­pa­nies such as Al­i­talia and Air Malta are still try­ing to find their fu­ture.

Af­ter ne­go­ti­a­tions with the EU Com­mis­sion in 2011 which al­lowed a state sub­sidy of €130 mil­lion, it was agreed that by 2014 Air Malta had to bal­ance its bud­get, and reg­is­ter a profit by March 2016.

Af­ter this pe­riod, un­der EU state-aid rules which safe­guard fair com­pe­ti­tion within the EU’s in­ter­nal mar­ket, the only in­jec­tion of cash al­lowed would have to come from pri­vate sources.

Air Malta pro­jected losses of €4 mil­lion for the fi­nan­cial yearend March 2016, sig­nif­i­cantly lower than the €15 mil­lion loss reg­is­tered at the end of March 2015. The EU Com­mis­sion did not hand down any penal­ties in view of the progress made be­tween 2015 and 2016.

Ear­lier this year the govern­ment said that it spent months of ne­go­ti­a­tions with var­i­ous air­lines in or­der to ac­quire a strate­gic part­ner which would buy a mi­nor­ity stake and in­ject some much-needed funds into Malta’s na­tional air­line – re­sult­ing in the MoU with Italy’s na­tional car­rier, Al­i­talia.

Re­cently, Prime Min­is­ter Joseph Mus­cat has started hint­ing the pos­si­bil­ity of pulling the plug on the Air Malta and Al­i­talia deal. He said that the govern­ment is con­sid­er­ing all options and as­sured the public that the govern­ment has a fall­back po­si­tion just in case the deal is off.

The Mal­tese Prime Min­is­ter, Joseph Mus­cat, is rais­ing lots of doubt re­gard­ing this deal

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