KM Malta Paid €74 Million To Get Rid Of Its Pilots. Now It Needs Pilots
Only in Malta could an airline spend €74 million to get rid of its most valuable staff, only to end up in crisis because it still needs those staff to fly its planes.
The standoff between KM Malta Airlines and its pilots is just another chapter in a long history of disputes, but it raises a far more serious question: how does a fledgling airline survive while still tripping over the wreckage of its predecessor?
Finance Minister Clyde Caruana, speaking on Xtra this week, made one thing abundantly clear – he will not back down one inch in his standoff with the Airline Pilots Association Malta (ALPA).
Caruana has accused pilots of attempting to squeeze even more out of a state that has already paid handsomely for their departure. He said pilots were looking to extend a four-year payout scheme to ensure they earn a salary while accumulating enough flight hours to qualify for captaincy, all while keeping the guarantee of a six- or seven-figure golden cheque.
In principle, he’s right. When your exit deal involves something approaching a million euro, it should come with finality attached. The idea that some are trying to linger around just long enough to top up their hours and still cash out is an insult to every taxpayer who has involuntarily contributed to this aviation saga.
Pilots wanted
But it doesn’t seem like that’s what this dispute is about. The captains who took the golden handshake are, for the most part, out of the picture. What remains is a group of first officers who didn’t sign up to the early retirement scheme, won’t be getting a cool million, and are committed to staying with the company and building a career. As a result of the scheme, KM Malta now finds itself short of captains – the very people who sit in the left seat and carry the ultimate responsibility on board. To fill this gap, the airline plans to bring in external first officers with more flight hours, fast-tracking them into command positions. This, however, would sideline the first officers who stayed loyal to the company and are still waiting for a clear pathway to promotion.
Sources who spoke to the Times of Malta said the union is pushing to stretch the four-year payout window further. The idea is to buy time, allowing younger first officers to accumulate enough flying hours to qualify for captaincy while older pilots, who would otherwise leave, continue to claim their salaries. This has been framed as a cynical attempt to keep older pilots in post to maximise their payout.
Three points are worth making here. First, we can’t exclude that there are individuals trying to take advantage of the situation for personal gain. Any organisation – union or company – will have its opportunists. But it does not appear that ALPA as a union is being motivated by this. Secondly, the union has in fact proposed a middle-ground solution: employing external captains on definite contracts. This would give the airline the experienced crew it needs in the short term, while allowing the current crop of first officers to progress naturally without being leapfrogged.
It’s also worth noting that the early retirement scheme covers the period between age 55 and 65. Pilots who opted for it but are still under 55 could, in theory, continue working until they reach that threshold – at no extra cost to the airline. Granted, they may be on a higher salary than a fresh recruit, but there’s value in having pilots who are already familiar with the company, its aircraft, and its routes. It’s a detail that raises further questions about why the company insists on external recruitment when internal resources exist, ready and trained. It also begs to question as to whether it is an issue worth going to war with ALPA with so early on in the airline’s life.
A problem of its own making
After spending around €74 million to encourage the departure of its most experienced cockpit crew, the airline is now desperately looking to plug the holes. That number alone, €74 million, should be enough to disqualify the idea that this is a viable business. What sort of startup burns through tens of millions just to get rid of its most critical personnel and then needs to hire new ones at full cost?
And let’s not forget, the reason KM Malta is short-staffed is not a freak accident. It is the direct result of a series of strategic miscalculations, most notably the decision to offer golden handshakes so generous they would be laughed out of any serious boardroom, especially for a company teetering on the edge of insolvency.
The early retirement scheme was introduced in the early 2000s, ironically to stop an exodus of pilots to the Gulf, where salaries and conditions were far superior. It was introduced to avoid the same problem of inadequate staffing the airline currently faces.
In return, the union agreed to a no-strike clause and mandatory arbitration, securing long-term industrial peace. At the time, it made sense. Two decades later, it’s become an albatross.
Konrad’s gamble
When Konrad Mizzi took responsibility for the national airline in 2018, he pursued a similar approach. He looked to sign agreements with all unions to get them on board with his plan to make the airline viable by growing it. This included guaranteeing pilots a job and a matching take-home salary until at least 2023. We can’t say with any certainty how this plan would have panned out had COVID-19 not happened, but it did.
When the pandemic grounded planes, pilots stayed home on full salary while Air Malta haemorrhaged cash. That was the moment to pull the plug. If there was ever an opportunity to shut down Air Malta and reallocate funds with some dignity, it was during a global shutdown when no one was flying anyway. Instead, the government chose inertia.
Different airline, same baggage
By 2024, Air Malta was finally shuttered, and KM Malta Airlines rose from its ashes. But the baggage remained, not just in labour relations, but in costs, culture, and contracts. The new airline was meant to be a clean slate. It inherited a €300-400 million transition budget, a reduced fleet, and a trimmed-down workforce of 420. But almost immediately, it walked into a storm of legacy entitlements and workforce tensions.
Now we’re watching a dispute that, at its core, is little more than a spreadsheet problem dressed up as an existential crisis. The pilots want a promotion pathway. The airline wants to ensure operational continuity and manage staffing responsibly. The solution is probably a structured plan, something that says, “here’s how long it takes to become captain, here are the hours required, and here’s how we rank you.” Nothing revolutionary, just something that a competent HR department and a spreadsheet should have sorted out months ago.
Instead, we have public standoffs and threats of legal action. Caruana thunders about taxpayers’ money. ALPA issues directives about using full runway lengths and speaking only in Maltese, unless the aircraft is on fire. Meanwhile, tourists check departure boards nervously.
Let’s be clear, ALPA has often acted like a guild from another century, treating pilots not as workers but as air-borne aristocrats entitled to stability no one else in 2025 can count on. In the real world, people buy their own income protection, if they can afford it at all.
But that doesn’t absolve the government. Clyde Caruana talks a good game now, but it was his government that concocted these arrangements. And for all the righteous indignation, it remains the case that this government paid a staggering sum to part ways with the very people it now needs back. A decision, which by the way, the Opposition essentially endorsed with.
To be viable, KM Malta must move beyond stern statements and political theatre. It needs stability, clear leadership, and the breathing room to manage its workforce sensibly and grow into a real business – not a national punching bag. If, as the minister has said, the airline is to attract a private partner within three years, it must stop being the elephant in the aviation room and start being run like any other private company: efficiently, transparently, and free of legacy deals that defy economic logic.
Anyone who has done the math, which I’m sure Caruana has, knows this isn’t about standing firm for its own sake. It’s about untangling a structure broken by years of short-term fixes and political bargains and finally putting in place a clear-eyed strategy to restore stability and credibility.
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