Malta’s flag carrier, Air Malta, is set to be replaced by KM Malta Airlines PLC in March 2024 in a move that the Maltese government hopes will help it regain control over the ailing airline. The announcement follows protracted negotiations with the European Commission regarding state aid and previous unsuccessful restructuring efforts.
New Airline To Replace Air Malta Announced – The End Of Recent Turbulence?
KM Malta Airlines plc will replace loss-making Maltese airline Air Malta on the 31st of March next year, Maltese Prime Minister Robert Abela announced on Monday. The news comes as the government’s most recent request for permission to issue state aid was denied by the European Commission, leaving the airline with no option but to wrap up operations under its current name.
It is hoped that the airline’s transition will be seamless for passengers, although several changes have been announced in relation to the routes KM Malta Airlines plc will operate. The new airline will operate more frequent flights to fewer locations, including Rome, Italy, Paris (CGD), France, Zurich, Switzerland, and Vienna, Austria, among others. Current routes deemed unprofitable will be cut once Air Malta’s operations cease in around six months, including Palermo and Naples, Italy, Nice, France, Geneva, Switzerland, Lisbon, Portugal, and Tel Aviv, Israel.
Regarding the new airline’s fleet, KM Malta Airlines plc is expected to inherit Air Malta’s current fleet of six Airbus A320neos and two Airbus A320-200 aircraft. However, two aspects that will change are the livery of its fleet and the airline’s frequent flyer programme, the latter of which will not be transferred to the new airline.
Moreover, although the government has stated that current employees will retain their jobs, no further details have been released on pay and conditions, and staff members will likely have to undergo a period of training and integration.
Uncertain Times – Clashes With The European Commission
At the height of the COVID-19 pandemic, the Maltese government requested the European Commission to allow it to inject €290 million into the struggling airline to save it from bankruptcy; following extensive negotiations, the request was denied in April of this year.
The Commission previously approved a request made by the Maltese government to issue €130 million worth of state aid in 2012; however, the government’s latest request was turned down due to the airline’s failure to become financially viable since its previous cash injection. The Maltese government had argued that having a national carrier was essential for the stability of the country’s travel and tourism industry and that the country did not want to depend solely on foreign operators.
The airline made it known last year that it would shut down and possibly relaunch operations should the EU deny its request for financial aid, creating yet more uncertainty for staff and those involved in the wider travel industry.
EU member states must seek the approval of the European Commission before issuing state aid as part of regulations set out in EU competition law.
Previous Restructuring Efforts – A Lack Of Confidence Among Employees
Air Malta has undergone several rounds of restructuring over the years, with the airline struggling to post a profit since its conception in 1973.
The airline’s most recent round of restructuring took place last year when it announced a voluntary employee transfer scheme in an effort to slash employee numbers and, in turn, costs. The scheme would allow employees to move to other government departments and maintain their current pay and working conditions. By the close of the application period, nearly 70% of employees had responded to the call, suggesting a lack of confidence among staff members about their job security and the airline’s future.
The restructuring process also involved negotiating new collective agreements, cutting the frequency of flights on unprofitable routes and setting up bases in other European countries.
Competition From Domestic Rivals
KM Malta Airlines plc faces tough competition from other Maltese carriers, including Malta Air and Wizz Air Malta, subsidiaries of budget airlines Ryanair and Wizz Air, respectively.
Malta Air was launched in 2019 as part of a partnership between Irish airline Ryanair and the Government of Malta. The airline operates a fleet of over 150 aircraft, comprising Boeing 737 jets (Boeing 737-800 and Boeing 737 MAX 8), and currently operates services to and from Malta across Europe and the Middle East.
Launched only last year, Wizz Air Malta currently operates flights to and from Malta, with destinations in Europe including Hungary, Italy, North Macedonia, Poland, Romania and Serbia. The airline’s fleet comprises more than 70 aircraft, including Airbus A320 (Airbus A320-200 and Airbus A320neo) and Airbus A321 (Airbus A321neo) jets.
Whether KM Malta Airlines plc will prove to be commercially successful and able to fight off competition from its rivals to regain hold of the Maltese market will become clear over the coming years.
Have you ever flown with Air Malta? In light of the latest announcement, do you think KM Malta Airlines plc will achieve success? Let us know in the comments!
