Alitalia/Etihad to buy 49% stake in Air Malta, Opposition gives initial reaction

Alitalia is to take a 49 per cent stake in Air Malta, Tourism Minister Edward Zammit Lewis announced this afternoon. A memorandum of understanding was signed yesterday and announced today.

The Italian carrier is 49 per cent owned by the UAE’s Etihad Airways, which has been leading its revival after years of financial losses. Times of Malta had last week reported that a deal between Air Malta and Etihad was close to completion.

Opposition leader Simon Busuttil in an initial reaction said the Opposition would keep an open mind and seek consensus on the deal, although he questioned why Alitalia was chosen given that it too is going through a financial revamp. (See below)

Air Malta has struggled to keep its head above water in recent years, with the government first intervening to keep it solvent in 2010 and the EU subsequently approving €130 million in state aid on the condition the airline was restructured.

Although in the last three years the restructuring exercise veered substantially from its original targets, the airline was aiming to end the last financial year with a loss of just €4 million.

Dr Zammit Lewis said the deal with Alitalia was a win-win situation. Consumers would benefit from Alitalia’s global partnerships through improved connectivity, while the tourism industry would  benefit as a much wider network of tourists would be accessed.

What was being done was being done to benefit the workers, he said.

The four trade unions that represent Air Malta workers were summoned to a meeting with the government at the Auberge de Castille this afternoon and told the news.

Dr Zammit Lewis said this would herald a turnaround for Air Malta and would allow the airline to grow.

He stressed that the deal requires everyone to be on board, from management, all stakeholders and the Opposition as well as the public.

Air Malta chairperson Maria Micallef said the deal was still in its early stages. “The Memorandum of Understanding means that from now on we will not speak to other airlines, but only to Alitalia,” she said.

It is hoped that technical negotiations will be concluded by the end of July.

This, she said, would bring investment opportunities for Air Malta. Alitalia has been turned around by Etihad, and is expected be profitable by 2017.

Dr Zammit Lewis said the government was guaranteeing the Air Malta workers’ jobs and working conditions.

The investment’s monetary value is still being discussed.

“This is not just about a monetary investment, the important thing is addressing the Air Malta’s inherent problems. It is not just about a one-off investment,” the minister said.

Alitalia in a statement said the memorandum of understanding will lead to a comprehensive due diligence with the possible intention of becoming a 49% shareholder in the Maltese airline.

“Once the due diligence is complete, the boards of Alitalia and Air Malta will make a decision on whether to proceed with an undertaking.

ALITALIA: FINAL DECISION AFTER DUE DILIGENCE EXERCISE

Alitalia’s CEO Cramer Ball said: “There are strong cultural and commercial bonds between Italy and Malta, and this MOU is a first and important step, but we will only make a decision once we have completed an exhaustive examination of a possible deal. We will need to establish unequivocally that a deal with Air Malta will not undermine the progress of our three year turnaround programme, or prejudice our financial position.

“Until then, it’s business as usual. We are on track to become a profitable entity by 2017 and we need to look and plan for the future, which is why we have decided to look closely to see whether Air Malta can fit into our strategic growth, particularly how our networks can complement each other in areas such as southern Italy.

“The future of the commercial aviation industry has to be one of consolidation, and for us to prosper we must examine opportunities where we believe we can offer a wider reach for our customers”.

OPPOSITION KEEPING AN OPEN MIND

Dr Zammit Lewis later gave a statement in parliament announcing the memorandum of understanding.

In a reaction, Opposition leader Simon Busuttil said the Opposition would keep an open mind on the proposed agreement but he hoped the issue would not be politicised and the Opposition would be consulted, something which to date had not happened.

He questioned why Alitalia had been chosen for a strategic partner, given that it too was going through a financial restructuring.

He asked if the agreement was actually with Etihad, which owns a big stake in Alitalia and is piloting its airline’s revamp.

He said that Alitalia did not serve Sicily well, so how would it serve Air Malta better?

Replying, Dr Zammit Lewis said the deal with Alitalia could mean new business for Air Malta in the south of Italy, as well as growth elsewhere.

Indeed, this deal would lead to a big leap in connectivity, with Air Malta having access to the Alitalia and Etihad networks.

Replying to various questions, Dr Zammit Lewis said this deal was aimed at safeguarding workers’ jobs. Talks would be held with the union through a committee headed by former President George Abela and Maria Micallef.

On ground handling, Dr Zammit Lewis said various options were being considered, including not being part of an airline and working for various airlines.

The minister said that while talks had also been held with other airlines, he could not disclose which they were.

Asked why the government had not considered investment by the Maltese themselves, Dr Zammit Lewis said everything had been considered but in a competitive airline business, Air Malta needed links which broadened its network and also brought it cost savings by being in a group.

Replying to a question on Air Malta’s routes and advantageous slots, Dr Zammit Lewis said Air Malta would keep its routes but it was too early to speak about this and about the landing slots which Air Malta enjoys.

Published on Time of Malta.