Kon­rad Mizzi’s Plan B: close down Air Malta and open a legacy-free air­line

● Air­line has of­fered unions the best deal it pos­si­bly can

The Malta Independent on Sunday - - FRONT PAGE - David Lindsay and Rachel At­tard

As Air Malta and the air­line’s unions con­tinue to ne­go­ti­ate new col­lec­tive agree­ments for its fly­ing crew, Tourism Min­is­ter Kon­rad Mizzi has a Plan B should talks, which have proved dif­fi­cult so far, fall through: close down Air Malta and open a new air­line with­out any legacy con­straints.

Con­tacted yes­ter­day, Mizzi, un­der whose min­is­te­rial re­mit the ail­ing air­line falls, ex­pressed con­fi­dence that, “With ev­ery­one’s co­op­er­a­tion we can suc­cess­fully im­ple­ment the re­vi­tal­i­sa­tion pro­gramme for the air­line.”

But, he added, “If union ne­go­ti­a­tions fail we have a re­spon­si­bil­ity to en­sure that a Malta-based niche car­rier serves Malta's needs.

“In the even­tu­al­ity that we will not be in a po­si­tion to im­ple­ment the rev­enue-driven re­vi­tal­i­sa­tion plan, we will then have no other op­tion but to con­sider Plan B due to sol­vency is­sues.

“This would mean the clo­sure of Air Malta and the open­ing of a new air­line with­out any legacy con­straints to fill the void. It is our re­spon­si­bil­ity to have a Plan B.”

The im­ple­men­ta­tion of such a Plan B would be a last re­sort but it is a prospect should the air­line fail to con­vince the fly­ing crew unions that it has al­ready given them the best pos­si­ble of­fer for their new col­lec­tive agree­ments.

In terms of these del­i­cate em-

ployee re­la­tions, where the aim is to fi­nalise col­lec­tive agree­ments with the unions for a fiveyear pe­riod, Mizzi said yes­ter­day, “As a com­pany we are ne­go­ti­at­ing and have of­fered fair pro­pos­als to the fly­ing crew, which are the most the com­pany can of­fer at the mo­ment. Any­thing be­yond what was of­fered means that the num­bers will not work. As part of the col­lec­tive agree­ments we need to se­cure im­proved pro­duc­tiv­ity and flex­i­bil­ity.”

Mizzi stressed that the govern­ment is com­mit­ted to Air Malta, and to strength­en­ing and grow­ing the air­line. He added, “I am con­vinced that there is an im­por­tant niche mar­ket for a Maltabased air­line. This is of strate­gic im­por­tance be­cause a Maltabased air­line is a key en­abler for tourism, business, and the econ­omy.”

Mizzi ex­plained that the re­vi­tal­i­sa­tion plan cur­rently un­der im­ple­men­ta­tion is based on rev­enue growth, more flights and fre­quen­cies and in­creased des­ti­na­tions.

He elab­o­rated, “For in­stance, the air­line has re-in­tro­duced its Tu­nis, Frank­furt and Manch­ester des­ti­na­tions and it has in­creased the fleet by an­other air­craft.

“These are just some early ini­tia­tives, with many more in the pipe­line.”

But such a plan, he warns, “re­quires ex­ten­sive change and needs to be rev­enue and ef­fi­ciency driven”.

Also con­tacted yes­ter­day, Air Malta Chair­man Charles Man­gion con­firmed that in re­cent days and over com­ing weeks a num­ber of meet­ings are be­ing held be­tween the air­line’s man­age­ment and the unions.

The nega­tions on the col­lec­tive agree­ment are be­ing chaired by Ge­orge Abela and Roberto Cris­tiano.

Man­gion said:“We are do­ing our best for an agree­ment to be reached but one has to keep in mind that the air­line will not re­ceive any sub­si­dies from the govern­ment over and above that which it had orig­i­nally re­ceived dur­ing the restruc­tur­ing plan.

“We also need to en­sure that the com­pany stands on its own two feet.”

Man­gion added, “We are of­fer­ing the unions the max­i­mum that the air­line is in a po­si­tion to of­fer with­out bankrupt­ing the com­pany, since we only have the com­pany’s re­sources to work with.”

We only get one chance to en­sure the business model works - Mizzi

Mizzi said that the prospects for fur­ther state aid or sub­si­dies are un­re­al­is­tic, stress­ing that: “We only get one chance to en­sure the business model works and that the com­pany gen­er­ates pos­i­tive cash flows and is sol­vent.”

To achieve the re­vi­tal­iza­tion of Air Malta, the air­line has set out to work on dif­fer­ent work streams, Mizzi ex­plained.

One such stream is rev­enue growth., “We aim to keep grow­ing the air­line, in­creas­ing air­craft, flight fre­quen­cies and des­ti­na­tions. This will be com­ple­mented by ag­gres­sive sales to en­sure that pas­sen­ger num­bers and prof­itabil­ity im­prove.”

An­other is the devel­op­ment of a new prod­uct range. Mizzi said, “We aim to do this in three stages start­ing by the un­bundling of fares. We are in the process of first launch­ing the ‘Go light’ prod­uct in the com­ing days. We will then make changes in cater­ing ser­vice pro­vided on board, and sub­se­quently work on an im­proved Business Class.”

In­ter­nal change, Mizzi said, is also es­sen­tial: “We have set out to im­prove and re­or­ga­nize Air Malta’s fi­nances and also make cer­tain im­por­tant ‘make or buy’ de­ci­sions.”

A Ryanair con­nec­tion?

Last Sun­day Mizzi had an­nounced that Air Malta, the govern­ment and Ryanair have been in talks to strike a code-shar­ing deal that will see Ryanair bring­ing pas­sen­gers to Malta af­ter which they would be trans­ferred to Air Malta for on­ward travel to African des­ti­na­tions.

The talks over such a deal come at a junc­ture that Prime Min­is­ter Joseph Mus­cat, speak­ing the same day, said was cru­cial for the na­tional air­line, which has been strug­gling to find it­self a strate­gic part­ner.

Al­though there was no talk of such a part­ner­ship be­ing struck with Ryanair, Mus­cat said yes­ter­day with ref­er­ence to the talks: “We have a vi­sion for Air Malta, and it is a make or break mo­ment for the air­line.”

Mus­cat also spoke about Air Malta be­ing “not only the air­line of the Maltese Islands, but of the Mediter­ranean”.

“We are open­ing up a new road for Air Malta’s fu­ture,” he said.

He said that dis­cus­sions with Ryanair, if fruit­ful, would make it a more at­trac­tive propo­si­tion for link­ing up with a strate­gic part­ner.

Stress­ing that this was an im­por­tant mo­ment for the na­tional air­line, Mus­cat ap­pealed for co­op­er­a­tion from all stake­hold­ers to help “en­sure a fu­ture for the com­pany and all who de­pend upon it”.

Ryanair and Air Malta are also con­sid­er­ing col­lab­o­ra­tion on sales and mar­ket­ing ini­tia­tives, in­clud­ing lever­ag­ing Ryanair’s web pres­ence for sales.

As a com­pany we are ne­go­ti­at­ing and have of­fered fair pro­pos­als to the fly­ing crew, which are the most the com­pany can of­fer at the mo­ment

Threat­en­ing em­ploy­ees not the way for­ward - UHM, PN

Both the UHM-Voice of Work­ers and the Na­tion­al­ist Party yes­ter­day said in state­ments that threat­en­ing em­ploy­ees was not the way for­ward.

The UHM said, "The govern­ment should seek to find the best strat­egy with con­crete plans for the fu­ture of Air Malta and not threaten their work­ers with dis­missal if they dis­agree with what is of­fered to them."

It added that the com­pany’s work­ers “should not be the sac­ri­fi­cial lambs for the prob­lems the com­pany has suf­fered over the years be­cause of weak plans and un­sus­tain­able strate­gies”.

The PN, on its part said, “The Na­tion­al­ist Party in­sists that Air Malta needs to have a sus­tain­able fu­ture di­rec­tion that, in a broader con­text, re­flects the role the air­line had and still has in eco­nomic and so­cial devel­op­ment in our coun­try, par­tic­u­larly, but not ex­clu­sively, tourism.

“The Na­tion­al­ist Party has al­ways been and will al­ways con­tinue to be clear with em­ploy­ees. Threat­en­ing is not the party’s style.”

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