Air Malta CEO Peter Davis stated (23-Nov-2012) the carrier is in a "far better position" than it was 18 months ago but "we are not out of the woods". He noted, "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". He said the carrier's restructuring plan envisages in 2012, it will halve losses from 2011 levels, with a breakeven result targeted for 2013. He added, "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". He stressed how essential Air Malta is for the whole country and its economy but said "due to this restructuring Air Malta is evidently restricted in terms of what it can do with new route accessibility". The carrier is, however, "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". He also noted the need to "create alliances with other operators provided these are fair and on a level playing field". [more - original PR]
Air Malta in improved situation, considers importance of alliances and strategic network expansion
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Air Malta Part 2: cannot match LCC unit costs; Alitalia not about to invest.
Part 1 of this report on Air Malta analysed its network, capacity development, codeshare partnerships and the competitive landscape in its markets. This second part looks at its financial track record and the development of its shrinking fleet and its financial track record. It also presents an estimate of Air Malta's unit cost position and the outlook in the aftermath of the Alitalia talks.
Air Malta's majority owner, the Maltese government, initiated a search for private investors in the loss making national airline in 2015. In Apr-2016 Alitalia signed an MoU with the government over the possible acquisition of up to 49% of Air Malta, but the two airlines announced on 13-Jan-2017 that talks had ended. It seems that the financial and political risks have prevented the investment from proceeding, particularly as Alitalia is wrestling with its own restructuring.
Its unit cost is efficient compared with European legacy airlines, but remains higher than the level of the LCCs with which it competes. Its short haul, non premium, point-to-point product has little with which to differentiate itself.
Air Malta has struggled to compete profitably and has reported several years of losses. A new plan is needed, and this may include a search for an alternative investor.
Air Malta Part 1: no longer the biggest airline in Malta as it struggles with rising LCC competition
On 13-Jan-2017 Alitalia and Air Malta jointly announced that the two had ended talks about a possible investment by the Italian airline in its Maltese counterpart. This throws the spotlight once more on Air Malta's struggle for viability in an increasingly competitive market.
In 2016 Air Malta cut its seat capacity by 12% and reduced its fleet by two, to eight aircraft. Having discontinued its North Africa routes, it is a Europe-only airline with no long haul network, focusing on point to point routes. A series of codeshares, including a new agreement with Alitalia, provide it with offline only access to long haul destinations.
Air Malta's highly seasonal and strongly leisure focused network is facing growing competition from LCCs. Indeed, its 2016 contraction coincided with expansion by Ryanair, which is now the biggest airline by seats to/from Malta. Modest capacity expansion is currently scheduled for 2017, but this is based on fewer routes, with more frequencies to partner hub airports.