Issue link: https://maltatoday.uberflip.com/i/563633
maltatoday, SUNDAY, 30 AUGUST 2015 15 question that remains is, how do we do this? We won't manage by sitting back and leaving everything as it is. We can only do this by get- ting our cost-base under control, then making sure we have attrac- tive pricing, coupled with the right product, flying to the right places – whatever that means – and win- ning back passengers…" He cites Switzerland as an exam- ple of a route where Air Malta has registered success. "Quite a few people said that, with Swissair coming in, Air Malta would not afford to sustain the route. But no, we argued that the opposite is true. Switzerland is expensive, wages are high and the exchange rate works completely against them. And passengers are not loyal: they will compare prices, and go with the cheaper airline. They will fly Air Malta. And in fact, on this route our passenger numbers have gone up…" The secret, then, is to emulate this success across the board. "We have to actively manage to compete in order to get more pas- sengers on board; and therefore, automatically we will be able to fly routes which today are loss-mak- ing… but in future, with a better cost structure, may not be loss- making any more. Sitting back and saying, 'these routes are not prof- itable, let's cut them…' That's too much of a quick-fix solution; it will not get us anywhere. But try- ing to get the cost down; working more efficiently; using our aircraft more efficiently; using better chan- nels… not just the classic channels, but also selling more online… All this combined, in addition to being cleverer in the way we use IT… this is what will get us back into com- petition. People will come back to us. That's the real solution: which, interestingly enough, is exactly in line with what the government wants as the shareholder. It's also exactly in line with what we want as a company, which is to become profitable. And it is in line with what the employees want, which is to have a stable, secure job…" Meanwhile, the clock is ticking on a restructuring process that may well have to be delayed again. What would happen if Air Malta does not break even by the end of this fiscal year? What are the con- sequences of a second failure to achieve this EU-imposed target? "What we have to do is relatively straightforward. We have a plan in place, there are parameters set by the Commisison for us to work within… it's a straightforward management issue. The real trick, however, is slightly different. The target of the restructuring plan is to 'break even': but if you look into the details, what it really means is to become 'cash neutral'. "There's a difference. Breaking even means you can pay your own bills: you have enough cash to pay your suppliers, your staff, etc. It doesn't necessarily mean you are profitable, however. So let us focus on the cash flow. That is the key. As long as we can pay our bills, the EU will leave us alone. And there is no way around the simple fact that we have to make money in order to pay our bills. There are ways to de- lay things a bit: if, for instance, we find an investor willing to invest in us; or find a way to get more bank loans – which is difficult to do, in today's world – we could fly a lit- tle longer on borrowed time. But it remains borrowed time, and that's never a good idea. We should clearly stick to the principle that we need to stand on our two feet in as far as cash flow is concerned." How confident is Klaus Gozzler that Air Malta will, in fact, meet these targets? "On the assumption that we don't have any disruptions – and by that I mean a strike – or natural disas- ters outside our control, such as the volcanic ash we had a few years ago… excluding all these possibili- ties, I am very confident." Interview The next 12 to 18 months are critical for the survival of Air Malta. Chief Financial Officer KLAUS GOSSLER exudes confidence that the national airline will reach its financial destination safely time We just need to be able to talk positively about Air Malta. The simple fact is that we shouldn't loosely use the word 'strike'… which can impact us far more negatively than anything else RESTRUCTURING