Air Malta will need to drastically cut its operations and jobs in order to survive

July 3, 2011

Air Malta Airbus A320-214 9H-AEN (msn 2665) LHR (Richard Vandervord), originally uploaded by Airliners Gallery.

Air Malta (Malta) is facing some difficult decisions. A draft restructuring plan by its consultant Ernst and Young details drastic cuts in aircraft, routes and personnel in order to survive. Exact details of the final report sent to the European Commission have not yet been release but it is certain that Air Malta will not be able to remain the same.

Read the article from the Times of Malta: CLICK HERE

On June 24, 2011 the company issued the following statement:

“Air Malta Chairman Louis Farrugia and Chief Executive Peter Davies this evening addressed the airline’s employees during an activity held exclusively for them at the Dolmen Hotel in Qawra. The event, organised specifically to address the concerns of the employees at such a delicate time for the airline, focused on the current situation, the need for change and move forward. This was the employees’ first direct opportunity to learn about the direction that the board of directors, the new CEO and the management are taking to save the majority of jobs at Air Malta.

In a meeting attended by hundreds of employees, Mr Farrugia said that Air Malta had no option but to carry out a significant restructuring to save the airline and hundreds of jobs: “We’re doing all that is possible to carry out this very difficult but mission critical task. Every stakeholder needs to embrace change in order to survive and rebuild the future.” He was confident that, “By working together we will make it.”

Mr Farrugia also announced that the airline has already started implementing the restructuring plan that has been presented to the European Commission, with a key milestone being the reducing costs by €30 million per annum, at the same time also increasing revenue by €30 million annually.

Following the Chairman’s address to the employees, CEO Peter Davies gave a detailed presentation of where the airline is today and highlighted the salient critical areas that needed significant change. Mr Davies presented the roadmap with milestones to be achieved that will secure the successful turnaround of the airline.

During his presentation Mr Davies revealed that in the last financial year ending March 2011 unaudited accounts indicated that Air Malta made a loss of 36 million Euros.

Mr Davies also announced a Voluntary Redundancy Scheme for the airline’s employees and said that formal talks with the unions will start as early as next week. He added that the turnaround is both essential and time critical. The end of summer, he said has been set as the target by which time the key changes will have been implemented.

Mr Davies announced the appointment of Philip Saunders, as Chief Commercial Officer of Air Malta. Mr Saunders, who has worked for Mr Davies before on other restructuring projects, is joining Air Malta to lead the Commercial Division. The CEO also announced that a Maltese Chief Financial Officer will be appointed to the airline on 1st September. The Chief Executive added that the airline needs senior experienced personnel – locals as well as foreigners – to spearhead the restructuring process.

Mr Davies reported that five more professionals, specialised in project management and airline restructuring are joining Air Malta and taking on the responsibility for Information Technology, Revenue Management, Finance, Engineering and Cargo Sections. This team is appointed on a temporary basis, specifically focused on accelerating the pace of change during these six months.

He concluded by stating that the task of restructuring Air Malta is challenging indeed and appealed to all stakeholders to understand that unnecessary speculation will harm the change processes. Meetings such as today’s meeting, he added are intended to communicate directly with employees to rebuild trust amongst the key stakeholders.

The meeting was chaired by Industrial Law specialist Dr Andrew Borg Cardona. Employees present for the meeting had the opportunity to ask many questions to the CEO. After the meeting the Chairman and the Chief Executive joined the employees for light refreshments in an informal get together.”

Copyright Photo: Richard Vandervord. Please click on the photo for the history of the airline.