Issue link: https://maltatoday.uberflip.com/i/911593
maltatoday SUNDAY 3 DECEMBER 2017 News 5 Heathrow, Gatwick slots hived off in new state company to raise funds through shares PAUL COCKS AIR Malta will be divesting itself of its last remaining assets – its flight slots at Heathrow and Gatwick air- ports – to place them in a govern- ment-controlled company. "This will allow us to raise funds through shares now that we can no longer receive any state aid," Air Malta chairman Charles Mangion said. "It will also ensure that these invaluable assets always remain part of Malta's national assets." MaltaToday had revealed on 3 July this year that hiving off Air Malta's landing rights had been one of the first recommendations put on the table after the appoint- ment of Konrad Mizzi as tourism minister. Landing rights in airports that are already at over-capacity, such as London's Heathrow and Gatwick, are crucial gains for airlines seek- ing slots for profitable routes. Mangion said that the new com- pany would be a fully-independent government company and not a subsidiary of Air Malta. He said the success the airline was forecasting for the next finan- cial year would only come about if the negotiations on the three col- lective agreements with the Gen- eral Workers Union and the pilots' Union were concluded in the near future. Tourism minister Konrad Mizzi said he was very proud that two agreements had already been fi- nalised and said the government and airline remained committed to ensuring that the company be- come successful and would work to conclude the negotiations on the agreements, which needed to be agreed upon by the end of the year. Government negotiator and President emeritus George Abela told MaltaToday he was "cautious- ly optimistic" about all negotia- tions, including those with ALPA, the airline pilots' association. Air Malta CFO Klaus Gossler said the airline had recorded a loss of €13.1 million in the fiscal year 2016-2017 but expects to break- even this year after breaking free of fuel hedging contracts that had forced the airline to continue buy- ing way above market price for the past three years. "In FY16, many of Air Malta's competitors still had hedging agreements in place so we were still able to somewhat compete with them," he said. "But in FY17, most of our competitors were buy- ing fuel at market price and could therefore offer better pricing deals than us." Upon questioning he revealed that the hedging agreement had been for a period of three years, ending in March this year, mean- ing it was signed while Edward Zammit Lewis was tourism min- ister. The airline bought fuel at €77 per barrel last year – while the market average stood at €55 – because of the long-term hedging agreements it had bound itself to in the past, he said. Mangion added that the Mal- tese airline would be investing in an additional aircraft, another Air- bus A320, in the coming year to make up for the increase in flights – the airline plans to make an additional 2,000 flights next year alone. The company board would also be discussing the possibility of a 10th aircraft in two years' time. Gossler said that the airline was forecasting a profit as of FY2018, once it got back to buying fuel at competitive prices and as it started implementing a new business model. The company decided at the end of the year to transition the national airline from a traditional one to a hy- brid business model, which will see Air Malta adapt to compete and sur- vive in the European low-cost airline market. The company will expand its Go Light system, charging separately for any luggage and additional services. Gossler said that since incep- tion, 148,000 Go Light tickets had been booked online, with 70% be- ing booked from abroad. Compared to last year, there were currently 141,000 additional guests who had already booked tickets this year, he explained. Total revenue in FY17 fell by €24.5 million, or 11.4%, over the previous year. "The fact that with a 20% reduc- tion in airplanes, from 10 to eight in FY2016, the company registered only 11.4% drop in revenue is testa- ment to the airline's strategy suc- cess," he said. Employee costs increased from €39.3m to €42.2m. Operating costs, on the other hand, fell by €16.8m in the last financial year over FY16, from €221m to €204.3m. CEO Paul Sies said that under the new hybrid business model, Air Malta would be putting its guests first and focusing on sales, rather than focus energy and resources on cost saving. "We will also continue to offer an unbundled product, as we have started doing with the Go Light system, since we realise we must fit in the low-cost flight environ- ment," he said. Air Malta posts €13 million loss but aims for 2018 breakeven