Air Malta has struck an agreement with its four trade unions as part of a strategy to reverse losses as the airline prepares for increased competition and opportunities following the island state's entry into the European Union.
The deal essentially comprises a moratorium on pay rises from 2004 to 2007, curbs on allowances, a recruitment freeze and voluntary early retirement.
The unions' legal adviser George Abela has called the agreement "historic", but the airline admits it will have to reduce costs by far more than the Maltese Lira1.3 million ($3.73 million) that the workforce deal alone will save.
Air Malta chairman Lawrence Zammit points out that losses on the airline's "core business" last year were Maltese Lira9.5 million, and he is looking to save another Maltese Lira3 million in operational costs and improve revenue by more aggressive marketing, better fleet utilisation and the exploitation of new opportunities offered by entry into the EU.
Zammit says the airline's new no-frills services to London Stansted, UK, are proving popular, but Malta's information technology and investments minister Dr Austin Gatt predicts that, if low-cost carriers take an interest in the Malta market, the "whole strategy" might need to be redrawn.
Meanwhile the carrier is taking advantage of its EU privileges by operating, since 1 May, two new services between Malta and London Gatwick via Catania and Palermo, Sicily. The airline is also operating a charter service to Spain for UK tour operators using two of its A320s based at Manchester.
Source: Flight International
