The Maltese government has announced that it will cease operations of the loss-making airline, Air Malta, in March of next year, following the European Union's refusal to permit additional state aid. Prime Minister Robert Abela stated that a new flag carrier, retaining the Air Malta name and aircraft, will immediately replace it.
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The transition is expected to be largely smooth with no impact on services, although unprofitable routes will be dropped. The new airline will operate to 17 destinations, compared to Air Malta's 37 in 2019. Passengers who have booked with Air Malta will be offered a refund or rebooking with the new airline, and Air Malta employees will be rehired by the new carrier.
This arrangement, similar to the EU's agreement with Italy over Alitalia and ITA, has been approved by the European Union. The Maltese government convinced the EU of the necessity for a small island state like Malta to have its own airline. The primary objective of this move is to establish a sustainable airline that does not depend on government support beyond initial capitalization. The new airline will continue to operate Air Malta’s current fleet of eight leased Airbus A320 aircraft. While the government will remain the majority shareholder in Air Malta, it plans to issue shares or form a strategic partnership with another airline. Finance Minister Clyde Caruana anticipates that the airline will become more efficient and profitable within two years.
Air Malta was established in 1973 and began operations in 1974, serving several European and North African countries. It faced stiff competition from more efficient low-cost airlines and received state aid in 2012 after accruing losses. However, a faltering recovery led to a request for an additional €300 million ($315 million) in 2021 as the COVID crisis severely impacted air travel. During negotiations with the EU, Air Malta reduced its workforce by more than half to just over 400, offering employees new government jobs or generous severance packages. The airline also began phasing out unprofitable routes and discontinued unprofitable ground services while relocating to less expensive headquarters.
