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10 NEWS maltatoday | SUNDAY • 8 OCTOBER 2023 Air Malta: After a hard landing, KURT SANSONE AIR Malta's maiden flight hap- pened on 1 April 1973, two weeks after parliament ap- proved a resolution to set up a national airline. The company started oper- ations with two Boeing 720B aircraft leased from Pakistan International Airlines. The first scheduled services saw Air Malta fly to the UK, Ger- many, France, Italy and Libya. Air Malta was Dom Mintoff's brainchild in a Malta that was industrialising and finding its feet economically ahead of the withdrawal of British forces in 1979. A critical Opposition gave the fledgling airline short shrift, branding its aircraft 'birds of lead' in the belief that it will not survive for long. The airline defied the Oppo- sition's bleak prognosis and just 10 years after its first flight went on to purchase three air- craft of its own from Boeing. It became an important cog in the tourism industry and a contributor to Malta's econo- my. Over the years, Air Malta em- ployed hundreds of people and carried millions of passengers to and from the island, be- coming a symbol of pride for a small island nation. But nostalgia only tells one side of this airline's 50-year- old story that will end on 30 March 2024 when the last flights will be operated. The once successful airline whose name has been etched in the national psyche experi- enced a slow and painful de- cline over the past three dec- ades. After two unsuccessful at- tempts to rescue the airline in 2004 and 2010, Air Malta plc will be wound down to make way for KM Malta Airline plc. The new State-owned compa- ny will inherit the Air Malta brand name but only if it suc- cessfully wins a bidding pro- cess. The bidding process for the name is symbolic of Air Mal- ta's demise. The airline was gradually stripped of all its assets over the years as suc- cessive governments sought to inject more funds and keep it afloat. Even its name, ostensi- bly one of its biggest non-tan- gible assets, was taken away and bought by a government company. It turned out to be a provi- dential move because it allows the new airline to bid for the brand, but it also shows how Air Malta was flown into the ground. In a parliamentary debate af- ter the government announced its plans for the airline, poli- ticians on either side tried to scapegoat each other for Air Malta's collapse. From the ill-fated decision taken in the mid-1990s under a National- ist administration to create a regional offshoot of Air Mal- ta with its own aircraft to the Labour government's decision to expand the network with unprofitable routes after 2017, every administration has driv- en a nail in the coffin. Finance Minister Clyde Caru- ana gave what was possibly the most sobering assessment, blaming all politicians and all governments for interfering with the airline's running. Caruana was reflecting a similar assessment given by the airline's first chairman Al- bert Mizzi, a renowned busi- nessperson, in a 2012 inter- view with The Sunday Times of Malta. "When I was at Air Malta, at budget time the minister used to go around to see what em- ployment he could factor in. Ministers are the worst be- cause they employ their own people... I have worked with both parties, they're all the same. For me politicians, at least many of them, are the most dishonest people in this world," Mizzi had said. The bloated airline heaved under the weight of an exorbi- tant wage bill, unrealistic col- lective agreements and routes that lost money. Nonetheless, it was a cow that politicians continued to milk relentlessly. Figures distributed to the media show that in 2010 the airline employed nearly 1,400 people. Today, following two years of cost-cutting and re- structuring, the airline em- ploys just under 400 people. The new airline will eventual- ly employ 375 people, the min- ister said, giving all employees currently on Air Malta's books the chance to apply for a job. And in a bid to avoid the ex- cesses of the past, Caruana said the work contracts offered by the new national airline will reflect the market conditions for comparable airlines. The numbers depicting the airline's losses are stagger- ing. In the 2019/2020 period, before the pandemic struck, on average, every flight lost €4,075 the moment the aircraft took off the ground. With a seat load factor of 74%, passen- ger revenue per flight stood at an average of €24,534. The business plan for the new airline is premised on a seat load factor of 87.8% thus ensuring passenger revenue per flight will reach an average of €27,844. With wage costs cut to €3,186 per flight from Income 2019/2020 2024/2025 Passenger revenue: €24,534 €27,844 Other revenue: €1,701 €2,982 Expenditure Aircraft maintenance: €6,629 €4,757 Air craft fuel: €6,995 €7,419 Direct flying cost: €6,745 €7,317 Employee cost: €5,786 €3,186 Other costs: €4,155 €5,281 Loss/profit: -€4,075 +€2,866 Routes serviced in 2019/2020 stood at 37 utilising 10 aircraft. The average revenue per rotation stood at €26,235, which meant that every time an aircraft took off the ground, Air Malta was losing €4,075. At the time the airline carried 1,990,000 passengers. Primarily, the problems were high wage costs and a seat load factor of 74%. The plan for the new airline envisages 17 routes by sticking to the profitable ones, operated with eight aircraft. The average revenue per rotation is estimated to be €30,826, leading to a profit margin of €2,866 every time an aircraft leaves the ground. This will come about primarily from an increase in the seat load factor to 87.8% and reduced labour costs. It is estimated the airline will carry 2,020,000 passengers. The cost of an Air Malta flight