UPDATED/It’s final: Alitalia slams the door on Air Malta deal
UPDATE 4PM: Air Malta does not own the aircraft it operates – they are all leased from a leasing company. This means that Air Malta does not even have aircraft as hard assets to set off against its debts when it declares bankruptcy. As far as I can gather, the only valuable asset Air Malta owns is its Heathrow morning slots, which may be worth up to €40 million.
Today I can report that Alitalia has slammed the door shut on any deal with Air Malta. The Maltese government had high hopes that the Italian national carrier, now 49% owned by Etihad, would buy a 49% stake in Air Malta and save Malta’s national carrier from oblivion.
Air Malta, which is €66 million in debt and facing ever increasing overheads and falling revenues, is technically insolvent. In secret negotiations with Alitalia, information about which has reached the press through sources in dribs and drabs, the Maltese government committed itself to pay off all of Air Malta’s €66 million debt, leaving Alitalia to take the company on unencumbered. But Alitalia has refused even this.
The government is now talking about shutting down Air Malta altogether, paying its €66 million debts, and setting up a ‘new company’ with Alitalia.
This means that, far from selling the national airline in a fantastic deal for Malta – as this matter has been presented to the public by the government’s well-oiled propaganda machine – the Maltese taxpayer will have to shell out another €66 million and get nothing in return for it.
It includes the following shocker:
“Alitalia and the Maltese government have already agreed that a new airline company will be created which will be freed of debt. The excess loans would be absorbed by the government,” the sources said.
What this means, as will be clear to any accountant, business operator or just all-round well-informed person, is that Air Malta is going to effectively declare bankruptcy and shut down, with the government picking up the tab on its bills so that its actual assets can be passed on to the ‘new company’ instead of being auctioned to pay Air Malta’s creditors.
What this means, too, is that Air Malta’s staff, including pilots will – once Air Malta formally folds – no longer have an employer. The ‘new company’ is then free to employ them or not.
This is exactly what happened when China bought one of Malta’s power stations and a significant chunk of Enemalta: Enemalta’s employees were shed by the company and put on the state payroll, working in government departments and becoming a permanent burden for the taxpayer.
In the case of Air Malta, this is going to be a little more difficult. Highly qualified and trained commercial airline pilots will not take kindly to being put behind a desk in a minister’s office and told that they are now ‘customer care officials’. Some of them might, but not all.
Dominici Azzopardi of the Pilots Union is fighting the wrong fight. Instead of fighting for more pay, he and his colleagues need, fast, to start thinking in terms of making sure there’s actually going to be an airline to pay them. And quite frankly, if that lot are lying even to Azzopardi, whose wife – the once very famous Simone Cini – has been an icon of the Labour Party and its broadcast media for more than two decades – then they will lie to anybody.
Azzopardi has an even bigger battle ahead of him than he thinks. And so do we. People living in Malta – regardless of how you vote, regardless of whether you are Maltese or not – need to understand that without a national carrier we are going to have very serious problems.
It is the national carrier which gives us our regular connections to the capital cities of Europe. The low-cost airlines connect us sporadically to secondary cities depending on the season. With Air Malta gone, we are likely to be doomed to a future of endless connecting flights via Frankfurt, to secondary airports and odd destinations.
