VALETTA, MALTA — According to Maltese news portal The Shift,  millions of euros in redundancy and severance packages are imminent as Air Malta's dissolution is anticipated by the end of the year. The plan to dissolve the country's flag carrier and replace it with a leaner, more commercially viable alternative is now in full swing. 

Current negotiations with Brussels focus on transitioning to a new airline without violating EU state aid rules. The European Commission has informally informed the government that the requested €290 million capital injection from 2020 will not be approved. As a result, the government is finalizing plans to dissolve Air Malta and establish a new carrier.

The process is set to be completed by year-end and will involve making all remaining airline staff redundant and providing them with substantial severance packages according to their respective collective agreements. These payments are expected to amount to tens of millions of euros. Pilots, in particular, have received generous compensation guarantees through side agreements negotiated between former minister of Tourism Konrad Mizzi and the pilots union, ALPA, in January 2018. Although the government has decided to shut down the national airline, discussions continue on how to establish a new airline without violating state aid rules.

The Shift reports that the plan is to follow the Italian government's model when they dissolved Alitalia and started ITA, but this approach is not expected to be inexpensive for taxpayers. Currently, negotiations aim to reduce the substantial redundancy package costs in accordance with collective agreements negotiated by Konrad Mizzi. The most significant issue involves the pilots' side letters, through which Mizzi committed the government to hundreds of thousands of payments for each pilot in case of redundancy. The Shift previously reported on the government's Plan B to close Air Malta if the cash injection request was denied, and that plan has now been activated.

The decision to close Air Malta follows years of losses due to mismanagement and the rise of low-cost airlines. In 2012, after two years of talks, Brussels allowed the government to inject around €130 million of state aid into Air Malta, contingent on a strict restructuring plan to return the airline to profitability by 2015. Despite initial progress, the plan faltered, leaving the airline facing bankruptcy without additional state aid. Prime Minister Robert Abela and Finance Minister Clyde Caruana have been tight-lipped about Air Malta's future, insisting that Malta will maintain a national carrier, though it may not be Air Malta.

In response to The Shift's revelations, the Opposition demanded transparency from the government regarding Air Malta's future. They criticized the government's abandonment of the restructuring plan and its inconsistent decisions, pointing out that Air Malta's closure is now a possibility. The opposition party highlighted the impact on employees, their families, tourism operators, and airline passengers, stating that the government's silence only exacerbates concerns. The statement was inked by Economy Spokesperson Ivan J. Bartolo and Tourism Spokesperson Mario de Marco.