WATCH: Tourism Minister Explains Why Air Malta Sold Its Slots to New Government Company

'We are convinced that by next year we will be making profit'

A new government-owned company by the name of Malta Air Travel Ltd. with a capital value of €70 million has just been set up in Malta. This company will be taking over the landing rights that Air Malta uses in some of the biggest airports around Europe.

The new company will be leasing the landing slots Air Malta used in airports like Heathrow back to the national airline.

"The government's strategy for Air Malta is for it to become the airline of the Mediterranean," said Minister Konrad Mizzi on the ONE discussion program Arena. 

He foresaw a national airline that operated throughout the Mediterranean and "connects airports in Africa with those in Europe. For this to happen, Air Malta needs a certain amount of resources to grow, and one of the assets that Air Malta has right now are the slots in various airports around Europe. 

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"The government has decided these slots, which right now hold no value on the Air Malta books, should be moved from Air Malta and placed within a new company that has a lot of capital, and this company can lease the slots long term to Air Malta, and in this way Air Malta has enough resources to invest in the future," he said.

In this way, "Air Malta can give value to these slots, which right now do not hold value for Air Malta per se. In the meantime, Air Malta can grow, increase routes, increase airplanes, increase the amount of pilots and cabin crew, more loaders, and we can offer a service where Malta is connected to even more countries," the minister said.

Minister Mizzi said that the new company was given a Maltese airline license, which he said was "essential for them to administer an airport slot."

"The objective is to safeguard the value of these slots, irrespective of the strategy of Air Malta."

Heathrow

Heathrow airport

He said that this company was set up specifically to allow Air Malta to grow. 

"Right now Air Malta has a certain amount of debt, and is not in a position to invest in its future. With this business plan, we are convinced that by March Air Malta will not make a loss, and we are convinced that once the agreement with the pilots is done, next year we will be making profit. For this to happen, a certain amount of capital is needed as well as minimising the debt that Air Malta currently has," he said.

"It's a way of protecting Air Malta and giving Air Malta the capital to grow," the minister said. "With this transition we can ensure that Air Malta will be enjoying these prime slots, as this will be a government company, and we can ensure that Air Malta takes full value of these assets."

He noted that Air Malta has slots all over Europe and even North Africa, and not all the slots were of the same value, with the Heathrow slot having a greater value than most due to the competitiveness of airline companies looking for a prime slot in such a congested airport with limited space. 

"The slot we have in Heathrow costs a lot of money everyday. Our intention is that Air Malta can use that money better, while at the same time still being able to fly flights from there," he said.

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A spokesperson for the Ministry for Tourism told Lovin Malta that "Malta Air Travel Ltd (MAT) will be acquiring certain slots at major airports from Air Malta plc. These slots are rights-granted by the relevant airports for landing and take-off at the relevant airport. The same slots acquired by MAT from Air Malta will be leased back to Air Malta on a long term basis. The slots will be leased exclusively to Air Malta throughout the term of the lease agreement.

When asked how much the slots cost, or how much the leased slots will cost Air Malta, they said that "the figures relating to the acquisition of the slots, as well as the lease payments, are commercially sensitive and will not be disclosed by Air Malta or MAT."

When asked if MAT thinks that exclusively supplying the slots to Air Malta at a cheaper rate than it is paying now amounts to state aid, they said that "all transactions between Air Malta and MAT (including the acquisition and the lease of the slots) are on arm’s length commercial terms. On this basis, there are no State aid implications in the transactions between MAT and Air Malta."

What do you think of the latest Air Malta development?

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Written By

Johnathan Cilia

Johnathan is interested in the weird, dark, and wonderful contradictions our late-capitalist society forces upon us. He also likes music and food. Contact him at johnathan@lovinmalta.com.

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