Issue link: https://maltatoday.uberflip.com/i/1206972
2 maltatoday | SUNDAY • 2 FEBRUARY 2020 CONTINUED FROM PAGE 1 During the financial year end- ed 31 March 2018, Air Mal- ta reported operating profits from continuing operations prior to restructuring costs and non-recurring items amount- ing to €1.2 million, over 2017's operating losses of €10.8 mil- lion. Indeed last year, when Kon- rad Mizzi was claiming that the airline had affected a turn- around by registering a small profit, the accounts had shown Air Malta's profits were gener- ated by clever book entries that allow the Maltese government to inject more cash in the air- line. Under state aid rules, Air Malta can no longer take a cent more from the government af- ter a €200 million restructuring programme six years ago. In 2018, the airline revalued its properties to get a €16 mil- lion boost to pad €223 million in accumulated losses from previous years. The real money-spinner for Air Malta were millions paid by the Maltese government to buy the airline's landing rights at London Heathrow and Gat- wick airports. To do this it cre- ated a government company which acquired the slots from Air Malta, but 'leases' them back to the airline. Those landing rights were given a speculative value of €33.8 million just for the sum- mer slots alone, giving Air Mal- ta a much-needed cash boost in a year where its selling and distribution costs climbed to €15 million and administration expenses increased to €17 mil- lion. By the end of March 2019, it will once again be a one-off €22.8 million boost from the London slots, this time for win- ter, that will keep the airline's finances stable. "The agreement contemplates two separate transactions, one for the respective slots for the summer season and the oth- er for the winter season... the summer slots were exchanged on 20 March 2018 [€33.9 mil- lion] which amount is fully re- flected as a gain [in] financial year ended 31 March 2018... "The winter slots were ex- changed on 12 July 2018 and accordingly, after the end of the current reporting period, the company recognised [a gain of] €22.8 million for the year ending 31 March 2019," auditors noted in the financial accounts. Despite the triumphant note struck by the Labour govern- ment on Air Malta, its own au- ditors have highlighted major conditions relating to the com- pany as a going concern: "the underlying assumption [is] that the business plan 2019-2021 can be successfully implement- ed... and [that] the confidence that the government has ex- pressed, on the basis of the legal advice obtained, that the proposed arrangements do not give rise to any form of state aid and that all restructuring actions are pursued within the framework set by the European Commission." Air Malta currently has €47 million out of €74 million in bank balances which are 'fro- zen' – that is, pledged in favour of bankers – even though they are considered to be "an inte- gral part" of the group's cash management. That is almost double what was pledged back in 2017 (€28.4 million). One way the airline has re- alised new profits is by recog- nising the sales value of un- used tickets as profit, after 12 months rather than 18 months. The effect of this change in- creased the company's revenue by €3.1 million. 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