Friday, July 20, 2012

Air Malta makes operating loss of €29.8 million for the year ended March 31, 2012

Air Malta’s operating loss for the year which ended March 31st, was €29.8 million, an improvement of €4.3 million over that in the previous year, airline chairman Louis Farrugia said this afternoon.

Speaking during the presentation of the airline’s results, Mr Farrugia said the year’s performance was further adversely affected by an increase of 30% in the price of fuel. This significantly increased the company’s fuel costs by €17 million. It also had a €4 million drop in profitability as a result of the imposed reduction in capacity as part of the restructuring agreement.

Mr Farrugia said that the target for the current year was to reduce the loss by 50% to €15 million. The airline had also negotiated a strong hedging agreement to buy 79% of its fuel at €108.75 dollars which is 3% better than the average hedged price obtained by the competition. The airline, he said, would be seeing a futher 10% reduction in capacity next year, resulting in a €16 million drop in revenue.

CEO Peter Davies said the company has implemented a new pricing system. Half its destinations had so far been covered by this system, the rest would be covered by October. Mr Davies said that Air Malta had negotiated new contracts with Lufthansa Technik for the overhaul of engines, with M.I.A. plc, leading to a substantial reduction in costs and it was in the process in the process of negotiating a new catering contract, among others. These would save the airline €8 million.

The company was also planning to increase €10 million in revenue by filling its aircraft more, increasing the yield per seat sold and through pre-and inflight ancillary services. Regarding cargo, which the airlines was criticised about by the Airline Pilots Association, Air Malta was overhauling its strategy and it expected to make €2 million more out of cargo handling in the current year.

Mr Davies said that the way forward for the airline was the continuation of the implementation of its 160+ programmes and projects it had in place as part of the restructuring exercise. He said that the company at the moment had 1,000 employees, who had to be cut down to 800. (Source: timesofmalta.com)