Air Malta halved its losses during the financial year ending March 2014 and is projecting to maintain its position for the year ending March 2015, despite several major setbacks such as the closure of the Libyan routes and increased competition in the peak summer months.
Audited figures announced during the Air Malta Annual General Meeting
showed that the airline posted a loss of €16 million (US$20.3 million)
for the year ending at the end of March 2014, compared to €31 million
(US$39.4 million) loss registered during the financial year ending at the
end of March 2013.
The numbers show that Air Malta is moving in the right direction
according to its Restructuring Plan, although it did not manage to reach
the more ambitious annual targets of a €15 million loss in 2013 and a
profit in 2014.
Air Malta chairperson M.a Micallef said the current financial year
had been directly hit by the closure of the Libyan routes (losing the
airline around €1 million per month, including incremental revenue from
transit business) and a 20% increase in seat capacity of other airlines
in the peak months.
“We were informed that our revenues would be hit by 10% and the
bottom line was forecasted to be a loss of €25 million, unless immediate
preventive actions were taken. We set ourselves a target that under
these circumstances we try and target a bottom line of a loss of €16
million for Year ending March 2015,” said Ms Micallef, who was appointed
chairperson in July.
Ms Micallef also highlighted the importance of thinking about the
long term strategy of Air Malta, beyond the restructuring plan.
“In the longer term, it remains clear to me that the realities of the
industry are such that the airline’s profit margins will always remain
wafer thin unless we rethink our business model to truly ensure
viability. We need to get out of restructuring mode and start thinking
of long-term sustainability beyond 2016. We will need the economies of
scale that we can never achieve with our size,” she said.
“If we are to make this work – and I am confident we will – we need
everyone’s support. In some cases, this means holding back. That is my
message to politicians, both Government and Opposition. The same applies
to all the representatives of the various stakeholders, who for the
first time have been invited to this AGM.”
“The reality is that this is Air Malta’s last chance for long term
survival. We have 17 months left to get this right,” she concluded.
Meanwhile, newly-appointed CEO Philip Micallef outlined his vision
for the airline and highlighted a number of initiatives being taken to
bring the airline to profitability by 2016.
“One of the key missions of this new management team is to work much
more closely with Malta Tourism Authority and other key stakeholders.
MTA and Air Malta have a joint responsibility to attract tourism to the
Maltese islands. In the past, the two entities complemented each other’s
work but did not combine their resources as effectively as they could.
We are holding joint meetings with tourism operators in various markets
as Air Malta seeks to intensify its presence in foreign markets. We have
entered into a new era of positive collaboration,” he said.
Similar joint initiatives are happening with Malta Hotels and
Restaurants Association (MHRA) and Federated Association of Travel &
Tourism Agents (FATTA).
“Our approach has been particularly successful with German tour
operators, where committed seats have increased by 300% in winter
2014/15. Similar encouraging results are already being achieved on our
Amsterdam and Brussels routes. Our code-share with Air France is doing
even better, with a ten-fold increase in passenger revenue,” Mr Micallef
told the AGM.
“At the end of summer we launched an aggressive promotion with a 25%
discount, for travel from November 2014, to get early bookings for
winter. In aggregate, early bookings for winter strongly indicate that
we could start to mitigate the losses in passengers from Libya and
slow-down in Russia through increased sales on other routes,” he said.
Mr Micallef said Air Malta now needed to improve its IT systems to
facilitate customer experience and increase revenue by providing a more
attractive pricing system for passengers.
“In the face of increased supply on some of our core routes during
the peak summer months, we must respond by taking advantage of
additional revenue streams. We are starting with generating ancillary
revenue pre-flight through product enhancements and the right technology
to promote the sale of these products. We are also looking at
developing ancillary products while on board,” he said.
(Source: AirMalta, 28-Oct-2014)