Taxpayers to fork out €300 million as government closes Air Malta

The Maltese government is expected to announce the closure of the national flag carrier, Air Malta, during a press conference on Monday, its 50th anniversary, ending years of unsuccessful discussions with the European Commission in a bid to save it from bankruptcy after decades of mismanagement and political interference.

At the same time, Finance Minister Clyde Caruana will also announce the creation of a new airline, while taxpayers will foot a €300 million bill to cover the dissolution of Air Malta and the creation of the new carrier.

While the government is expected to position the development as a ‘seamless transition’, this will not be the case for hundreds of Air Malta employees who will be made redundant. Positions with the new airline are set to offer a lower remuneration package, similar to those offered by low-cost and budget airlines.

Monday’s announcement has been on the cards for some time despite Prime Minister Robert Abela and Caruana previously avoiding any confirmation. In August 2022, The Shift exclusively revealed the government’s Plan B, making it clear that the closure of Air Malta was imminent.

The Shift reported that Air Malta would be shut down on 11 August 2022.

In April, The Shift also revealed that Air Malta’s closure would happen after the summer season, and a new airline created. Air Malta Chairman David Curmi later confirmed this.

The chairman, paid some €21,500 a month to close down the airline, was publicly chastised by Caruana for confirming the news.

A new €300 million price tag

In 2020, after years of mismanagement and losses of millions of euros, the government asked the European Commission to inject €290 million of fresh funds into Air Malta to save it from bankruptcy.

This was the second time the government asked for a ‘restructuring plan’, and the Commission informed the government it would not be possible and the airline would have to be shut down.

Caruana and Curmi started laying off staff, carrying out internal restructuring, and trying to cut costs to buy time and delay the bad news.

Hundreds of millions of euros of taxpayer funds were used for severance packages, voluntary retirement schemes, and new permanent jobs in other government institutions. The ground handling operations were also sold off.

But it was not enough to save the beleaguered airline as it continued to haemorrhage funds and accumulate millions in losses. The government refrained from publishing Air Malta’s accounts since 2018 to keep the losses under wraps.

In the meantime, Caruana tried to untangle generous collective agreements negotiated by his predecessor, disgraced former tourism minister Konrad Mizzi, which continued to drain funds from the airline.

The collective agreements, along with side agreements which gave pilots unprecedented terms, were put in place when Prime Minister Robert Abela was an adviser to Mizzi.