Chairman confirms ‘very bad’ Air Malta situation, remains confident of state aid plan

Air Malta’s executive chairman has confirmed reports of the dire situation Air Malta is experiencing, but remains confident that a plan for state aid to be presented to the European Commission will be accepted.

Over the weekend, the Minister responsible for Air Malta, Clyde Caruana, said the airline is bleeding cash to the tune of €170,000 a day.

David G Curmi, who was recently appointed to the post of executive chairman at the national airline, was loath to commit to a figure, but confirmed that the situation is “bad, very bad”.

Asked whether there is a contingency plan should the Commission fail to approve the Maltese Government’s plan, Mr Curmi declined to answer, expressing his confidence that Malta will be making a “very strong case”.

However, this will not be the first time the Commission is seeing a plan to rescue Air Malta before it, with two cases in 2010 and 2012, for a soft loan and an equity intervention respectively, being accepted, but ultimately not being enough to turn the airline’s fortunes around.

The Commission will therefore be sceptical about any plan for restructuring, but Mr Curmi believes this is an opportunity for Air Malta to get back on its feet, if it is done well.

“We have to ensure that any strategies that are presented for the restructuring are implemented rigorously to achieve the desired results,” he said. “Otherwise, it will just be a paper exercise.”

Air Malta is hampered by the continuing uncertainty of the pandemic situation. While it is looking at forecasts on what is likely to happen in summer being presented by organisations such as IATA in order to create a baseline scenario, it also has a pessimistic scenario in case countries enforce more stringent restrictions.

“If this happens,” said Mr Curmi, “the baseline scenario will not happen.”

“Ultimately,” he concluded, “demand is still very subdued, and the situation is fluid and uncertain.”

European Union rules prevent Member States from providing financial assistance to any enterprise, whether private or state-owned, in order to preserve competition rules. However, these rules have been relaxed during the COVID-19 pandemic, especially for companies in the hard hit tourism and aviation sectors.

Examples of state aid recently given the green light by the Commission include €120 million in state aid to Aegean Airlines, €290 million to Brussels Airlines, and €7 billion to Air France, by the Greek, Belgian and French Governments respectively.