MHRA ANNUAL CONFERENCE ADDRESS By Peter Davies, CEO, Air Malta plc

Mr President, Honourable Minister, Honourable Members of Parliament, Ladies and Gentlemen,

It is indeed a pleasure and an honour for me to address you this morning at this important event. Thank you Mr President for the invitation.

As the Chairman highlighted in his speech, this time two years ago, Air Malta was effectively bankrupt.

Had it not been for the intervention of the Maltese Government and the €52 million emergency loan, the airline would have closed down. At that time few realised the state Air Malta was in.

18 months down the line we are in a far better position but still we are not out of the woods.

When I joined Air Malta, the airline's financial position was in critical shape with a forecasted loss in FY 2012 of €55.6million. Life at Air Malta had to change and change fast.

In a few months time we managed to decrease this figure to an audited €29.6 million loss. After four years of continued losses in our peak months, this summer we managed to register a modest operational profit of €0.4 million. Our Restructuring Plan envisages that this year we halve last year's losses and breakeven next year. This is my immediate focus.

Such results have not and are not being achieved by chance. We had to manage the airline differently. We spearheaded our famous 162 projects that span across the airline.

Air Malta's restructuring was never simply a question of decreasing the workforce, which was admittedly important in terms of costs, but also of encouraging employees and unions to think differently in terms of processes and procedures.

We have reviewed every single aspect of the company in terms of processes - our ground and passenger handling, our engineering, our marketing, how we fly our airplanes and each individual department to reengineer our business processes.

We have been reassessing many of our contracts with major suppliers to reflect the changes we want in Air Malta. This was not only a question of cutting costs but also of the product and service that we want to offer our customers today and in the future.

I strongly believe that in a restructuring process about 30 per cent of the changes needed are a 'rewiring' of the actual systems. The rest requires a change in the people hearts and minds. This does not only refer to our workforce but in each and every stakeholder of the airline, including external agencies.

This is what I call, 'A cultural revolution'. It's the winning of the hearts and minds that proves to be the biggest challenge.

As businesses involved in the tourism industry we have a significant job to do to continue winning in the market. To do this we require a national airline which is alive and vibrant and that can demonstrate the best things about this country abroad. Our new airline branding aims to communicate these attributes.

The new brand has been designed to reflect the look of Malta. It is based on the storytelling of our history, heritage and colours of the Maltese islands. With our new brand we are ideally positioned to become the ambassadors and guide of choice to the very best Malta can offer.

The focus of Air Malta's young and dynamic rebranding is all about these values represented with the different colours and symbols which represent the islands.

We have a responsibility, as the proud national flag carrier, to convince people that we are the number one choice as a destination and secondly we are recognised as the number one destination airline. We can excel and win at both.

This re-branding gave Air Malta a new opportunity to start a new beginning - to win again the hearts and minds.

This will not just be a livery change. We must now make sure that the quality of the products and services we provide are commensurate with the expectations of Malta. There are a number of product changes and enhancements which will be taking place in the coming months, as we reshape the way we provide services and offer our customers a more enjoyable experience. There will be a number of pleasant surprises in store.

We are a destination airline and therefore we want to ensure that Malta is reflected onboard Air Malta. Our passengers must feel they are in Malta from the moment they step on one of our aircraft. The values of Air Malta are the values of Malta. Our competitors have their own values which are significantly different from the values of Air Malta.

A few weeks ago I witnessed much passion from the general public following the arrival of our aircraft in our new brand livery. I felt the same passion a few months ago when for the first time we revealed this new livery first to our employees.

There is a growing recognition that the Maltese public have faith in our capability of being the true ambassadors for the country.

We all know how essential Air Malta is for the whole country and its economy. As Chief Executive of the airline I understand the enormous responsibility entrusted to us to spearhead the airline's restructuring.

Currently due to this restructuring Air Malta is evidently restricted in terms of what it can do with new route accessibility. Nevertheless, we are looking into future opportunities, both in Europe and beyond that can be implemented once the company is in a better financial position. We are looking specifically at Eastern Europe and Africa and in fact have already enhanced our business to Russia. We continue to look out for these opportunities.

Competition is important and I acknowledge that the country needs to create alliances with other operators provided these are fair and on a level playing field. However I agree with the Chairman that we must maintain a healthy balance otherwise our current successful tourism business would be threatened.

I passionately believe that Air Malta has entered a new era. Whilst we recognise the efforts of the many people who have contributed to its history, it will be worthless if we don't succeed going forward.

We have only just started, we have overcome inertia, our wheels are rolling. I am confident that we have the necessary stamina and pride to demonstrate that Air Malta is an airline which delivers the values of Malta. Everyone of us has the responsibility to proudly carry that legacy forward into a new dawn.

I wish to thank you, all stakeholders of this industry, especially the MHRA and the MTA for their efforts and thrust in us. As the national airline of Malta we promise that we will continue to play a vital role in assisting this industry for it to continue being a winner for this country.

Thank you.