Air Malta (KM, Malta Int’l) is to lay off almost half of its workforce as part of the Maltese government’s plan to save 15 million euros ($17 million) a year under a final cost-cutting effort to save the loss-making airline, according to Finance Minister Clyde Caruana.

Speaking at a press conference on January 14, he confirmed that more than 400 of the company’s 890 employees would be made redundant. Between 110 and 120 administrative staff would be transferred out of the company to other public sectors under a voluntary transfer program that would remain open until January 28, local media report.

In addition, Air Malta would close its ground handling operations in the second quarter of 2022, resulting in a further loss of 300 workers, who would be offered similar intergovernmental transfers across the line. The airline wishes to conclude the discussions on the collective agreement as soon as possible with the various unions representing the employees, following a meeting on Friday 14 before the announcement.

Caruana confirmed that the national airline was currently recording a loss of 170,000 euros ($193,000) a day, having racked up 258 million euros ($294 million) in operational losses since 2005, the Malta Independent newspaper reported. .

In another cost-cutting measure, the airline is said to have abandoned plans to acquire two A321-200NX (XLRs) after abandoning its long-haul plans. He now wants to lease three A320-200Ns instead. A request for proposals (RFP) has been issued for the lease of three A320-200Ns, and the company would transition to an all-A320neo fleet by 2024. Caruana said plans to introduce long-haul flights have been dropped . “There was an agreement to buy two aircraft capable of this, but that agreement has now been changed.” According to advanced ch-aviation fleets module, Air Malta’s current fleet comprises three A320-200s and four A320-200Ns.

The airline was not immediately available for further information.

Malta has been negotiating with the European Commission (EC) since April 2021 for €290 million ($332 million) of state aid for Air Malta as part of a five-year state aid funding plan to redress the national carrier amid growing calls from political parties for more transparency in the government’s dealings with Brussels.

Caruana could not disclose the amount of funding the EC would approve, but stressed that these cost-cutting measures were non-negotiable to save the airline. Whatever funding is provided would cover losses during COVID-19, when the airline had already faced significant challenges before the pandemic. He said Brussels had lost faith in Air Malta given a series of broken promises to turn the company around.

“Every time an airplane flew to any destination, that flight resulted in a loss for the company. So I could never claim that the Commission would allow us to give away a large sum of money,” he said. -he declares. Still, the amount would not affect any cost-cutting decisions made public or whether the airline would continue flying. “The Commission’s preferred option was to close the company and start a new one, but I told them I didn’t agree with that decision,” he revealed.

Air Malta already received state aid in 2015. Under standard EU state aid rules, this meant applying a ‘once for the last time’ principle, allowing a state aid once every ten years – by 2026, Caruana explained.

Regarding the planned cost-cutting measures, Air Malta’s executive chairman, David Curmi, said the airline would consider establishing bases outside Malta for flights that would not land in Malta. Mediterranean island. The goal was to save on unsustainable unit costs. Cost comparisons between Air Malta, Ryanair, easyJet and Aegean Airlines had shown that the Maltese carrier’s unit costs were 44% higher, mainly due to overstaffing and expensive ground handling. Journalists have learned that Air Malta currently holds only 30% of the local market, with Ryanair having the lion’s share.

The airline could also save 3.9 million euros ($4.4 million) a year by operating more charter and cargo flights, Curmi said.

The airline’s route network would be further reduced after already halving the number of destinations from 40 to 20 for summer 2022.