Air Malta staff rationalisation gathers pace

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More than 500 Air Malta employees have applied for voluntary redundancy or retirement as part of a rationalisation programme at the ailing flag carrier. Some 240 staff members have already departed, and a total of 444 will have left by July 2013.

The airline committed to the restructuring initiative after posting operating losses of €33.9 million ($45.1 million) in the year ended March 2011. Management in December 2011 struck a deal with two unions - the Association of Airline Engineers and the General Workers Union - to reduce its 1,250-strong workforce and increase efficiencies.

Alongside the staff cuts, Air Malta has also committed to a 20% capacity reduction in the 2013 full year against 2010 levels - reducing its fleet from 12 to 10 Airbus A320s - though chief executive Peter Davies has ruled out shedding further landing slots.

"This is a massive re-organisational project with many staff leaving [and] others taking up new roles," he says. More than 1,000 applications have been received for 161 new positions created in-line with the new organisational structure. "These are exciting times for Air Malta as it has never been through such enormous change."

The cutbacks come as the European Commission continues its investigation into Air Malta's refinancing plans.

Brussels is concerned that a fresh capital injection of €130 million by the Maltese authorities would violate the EC's one-time/last-time principle, which limits state aid for restructuring to a single instance in a 10-year-period. In November 2010, Air Malta received an initial €52 million rescue loan. European regulators have also expressed concerns about the "long-term viability" of its recovery plan.

Davies maintains that the five-year restructuring plan adheres to EC guidelines and will deliver profitability by 2015. He cites numerous recent successes, including a 4.5% increase in revenue for the six months to September 2011 and a 33% reduction in sales and distribution costs.