Unions criticise poor communication during Air Malta restructuring

After being on the brink of bankruptcy, the national airline Air Malta was forced to shed some of its workforce and submitted a restructuring plan to the European Commission that included €130 million of state aid. The plan was approved, but three of the four unions representing the various categories of Air Malta employees have complained about lack of consultation during the restructuring process and raised serious doubts about the viability of the airline.

Background

Towards the end of 2010, the Maltese government was holding negotiation and consultation meetings with the EU Commission to solve the financial crisis of Air Malta, which was on the brink of bankruptcy (ERM factsheet ID16985). The Maltese government had to submit a first draft of a restructuring plan for Air Malta by the first week of January 2011, and present a final plan within six months (MT1012039I). A steering committee, set up to oversee this restructuring process, included the four trade unions representing all sections of Air Malta employees. These were the General Workers Union (GWU), the Association of Airline Engineers (AAE) the Union of Cabin Crew Malta (UCC) and the Airline Pilots Association (ALPA).

Redundancies

It was made clear that this restructuring exercise would create redundancies, so separate meetings to discuss job losses were held with each of the four unions by the newly appointed Air Malta Chair and Chief Executive Officer Peter Davies. Six hundred of the 1,300 staff were expected to be made redundant. Early retirement schemes, severance pay and alternative employment within public entities and agencies were the main options given to workers. Agreement was reached with all four unions; however, the GWU said its members’ approval was due to fear instilled by management.

Prolonged negotiations

Negotiations between the Maltese government and the European Commission (EC) were prolonged because the EC asked for clarification and changes which involved gathering new data, including a fresh evaluation of some of Air Malta’s assets. The four trade unions criticised this, saying the slow process caused tension and frustration among workers. The unions also pointed out that the new management was shedding existing workers while recruiting new cabin crew, and complained about the lack of consultation on this recruitment. They also criticised the government and new Air Malta management for neither informing nor consulting them on the sale of Air Malta property. Peter Davies replied that, despite slow negotiations with the EC, the airline had exceeded its goals for the last financial year and remained on target to break even by 2014.

Restructuring plan approved

On 28 June 2012 the EC approved the Maltese government’s €130 million state aid restructuring plan for Air Malta. Finance Minister Tonio Fenech believes the EC’s five months’ scrutiny of the plan confirms that it adequately addressed the financial problems of Air Malta.

However, ALPA President Dominic Azzopardi said the plan was a ‘cover up’ that would ultimately lead to the sale of Air Malta at below market price. The union was disappointed there was no action on cargo rates and third party contracts which, it said, were highly beneficial ‘to a clique of businessmen’ who were ‘milking the national airline’.

Meanwhile the UCC President, Noel Mercieca, said he hoped the money would be used to help the airline survive rather than provide just a short-term solution. The UCC also queried cabin crew vacancies after the reduction of staff through an early retirement scheme.

The GWU Secretary General, Tony Zarb, was satisfied with the EC approval, but hoped the union would be given more information.

Only the AAE, representing Air Malta engineers, gave its total approval. The union’s Public Relations Officer, John Baptist Camilleri, said the approval was a ‘positive development’ but added that his union had made some suggestions after seeing the report.

Commentary

The €130 million of state aid approved by the EC is crucial for the survival of Air Malta.

The setting up of a restructuring steering committee on which the unions were represented had led union officials to believe that they were going to be consulted and informed about all developments throughout the restructuring process.

Given the relative size and importance to the economy of Air Malta, and the extent of its problems, the unions expected a much more open line of communication with management. The comments of three of the four unions that represent Air Malta workers demonstrate that, in fact, they have been consulted only about redundancies and have been taken into the management’s confidence on other issues only on a need-to-know basis.

Dissatisfied union officials have implied that the management, which will leave after the restructuring plan has been completed, should have built a stronger proactive relationship with the unions.

Saviour Rizzo, Centre for Labour Studies

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