86.8% think Air Malta should be saved at ‘all costs’

● PM does not confirm or deny discussions with Chinese strategic partner

An overwhelming majority think that Malta’s national airline, Air Malta, should be saved at all costs, the seventh edition of The Malta Independent’s iSurvey shows.

With a snap election just around the corner, on 3 June, this is one of the few issues that has broken through the usual tribal-style partisan politics. Respondents were asked: Should the government save Air Malta at all costs? Overall, 86.8% believe so, 7.5% do not and 5.7% are undecided.

Breaking down respondents’ answers on their voting intentions should an election take place today and on how respondents voted in the 2013 election, people on both sides of the political divide overwhelmingly agree that Air Malta should be saved at all costs.

Taking a look at respondents’ voting intentions should an election take place today, 89.8% of PL and 86.5% of PN voters believe that the national airline should be saved at all costs. Onto how people voted in the 2013 election, 88.1% of PL voters and 86.9% of PN voters also agree that the airline should be saved no matter what.

The issue of Air Malta has been particularly contentious after a PN government managed to broker a 2012 European Commission decision to allow one last state subsidy of €130 million to be injected into the airline. By 2014, Air Malta had to balance its budget and register a profit by March 2016.

Following the €130 million state subsidy, no more injections of cash could be allowed to prop up Air Malta due to EU state-aid rules which safeguard fair competition within the EU’s single market. This means that any further investment could only be made by third parties.

Despite the government’s failure to ensure that Air Malta turned a profit by 2016, the Commission had provided Malta with some breathing room after the current administration managed to reduce losses from €30 million to €4 million.

Back in October 2016, Tourism Minister Edward Zammit Lewis, who is also responsible for Air Malta, announced that the government was pursuing efforts to secure a strategic commercial partner for the airline. This would allow for some much needed investment, would also allow the state to continue its majority shareholding of Air Malta, and would be in compliance with EU rules.

PN and Opposition leader Simon Busuttil insisted that local investors could be found to save the airline. Dr Zammit Lewis had also said that it would not rule out local investment or the possibility of issuing an Initial Public Offering (IPO). The last strategic partner to enter discussions with Malta’s national airline was Alitalia, but negotiations ended and no agreement was reached. Alitaila is itself in trouble and could face liquidation. Questions surrounding Air Malta’s future have now grown as a result, and calling a snap election nine months ahead of its time has given some reason to believe that the Prime Minister is trying to avoid taking a hard decision before an election.

In January 2017, The Malta Independent on Sunday reported that Air Malta was preparing its final restructuring programme to present to the European Commission in a last-ditch attempt to salvage the airline from liquidation following the failed attempt to bring in new cash from Etihad through its investment in Alitalia.

Sources within the government confirmed to this newsroom that the government was seeking approval from the EU to be able to issue early retirement schemes to a sizeable number of its workforce. The plan was to have a much leaner airline that could survive alone, at least until it is gobbled up by a giant airline the likes of Air China that is craving for a foothold in the EU.

The early retirement schemes are, however, viewed as State Aid by the European Commission, which had already closed an eye back in 2012.

Prime Minister Muscat mum on current talks with possible strategic partners

The Malta Independent questioned Prime Minister Joseph Muscat, while on the campaign trail, about whether a Chinese company was in the pipeline for the national airline.

Dr Muscat would not say the nationalities of the companies currently in preliminary discussions, but did say that he believes good news is on the horizon.

“I will not say if there are or aren’t Chinese companies involved. What I can say is that there are companies from different countries very interested in Air Malta. The aim of our negotiations is for Air Malta workers not to lose their jobs, and we assure them of their jobs.”

The April 2017 iSurvey – the seventh of its kind – was commissioned to Business Leaders Malta on behalf of The Malta Independent. Respondents were contacted between 25 April and 3 May, while a snap election was announced on 1 May. More info on the iSurvey will be disclosed throughout the week.

Calling a snap election nine months ahead of its time has given some reason to believe that the Prime Minister is trying to avoid taking a hard decision before an election I will not say if there are or aren’t Chinese companies involved. What I can say is that there are companies from different countries very interested in Air Malta