Air Malta’s redacted report published by EC
Air Malta has today followed up on the news issued last week and has published its unaudited statements of income and financial position for the first six months, April to September 2012, of its current financial year.
The results complement the publication this week of the airline's redacted Restructuring Plan by the European Commission. The 30-page document details the various initiatives that are being taken to return the airline to profitability.
The figures, together with a statement by the airline’s Chairman, provide further details on the airline's financial performance for the period. These interim results show an airline operating profit of €0.4 million; an operating improvement of €8.4 million over the same period last year when the airline registered an €8 million operational loss. The income statement for this period shows a loss after deducting restructuring and finance costs of €5.5 million; an improvement of €6.7 million over the €12.2 million loss registered during the same period last year. This was the first time in four years that an operating profit has been registered in this period.
Louis A. Farrugia, Chairman of the Air Malta Board said, "This is the second year running that the airline has issued its half yearly figures. This is in line with the Board of Directors' policy to announce Air Malta’s operating results every quarter. The publication of these figures comes barely three weeks after the end of the period being reported. This reflects the improvements the airline is making, not only in terms of corporate governance, but also in updating the airline stakeholders, including the general public, of the airline's restructuring efforts."
"These interim results show that significant progress has been achieved at the operating level in cutting costs and increasing revenue; both essential steps that we need to be successful at if we are to secure the long term profitability of the airline. I wish to thank all employees for their vital efforts towards these goals, and encourage them to continue to press forward with the massive change programme that is underway."
Air Malta's Chairman emphasised the critical situation that the airline was in last year, and stated that it was essential to start implementing the plan with urgency and well ahead of the Commission's formal approval. "In fact several of the initiatives listed in this published plan have already been implemented, including the 20% reduction in capacity that was achieved by Summer 2012. No further reductions in capacity or release of slots over and above what we have already implemented are envisaged," he confirmed.
"The Board and Management are now concentrating on further reductions in costs and the continued assessment of supplier arrangements. These are essential steps towards continued improved results. The challenges ahead are still very formidable," the Chairman remarked.
"Although these results represent a very encouraging step towards the turnaround of the airline, there is clearly a lot of work that is still required to return to full year profitability," added Mr Farrugia. The Chairman noted that the second half of the financial year included the more difficult winter season, and that losses were expected to be incurred for the financial year as a whole. However, the Board of Directors and Management are cautiously optimistic that operating results for the full year will be in line with the restructuring plan. The Chairman also noted that whereas operating results had shown a marked improvement, the radical nature of the restructuring that was underway did mean that material one-off restructuring costs would necessarily be incurred in order to secure the necessary transformation of the airline and its business model.
Mr Farrugia underlined the recent initiatives taken at the end of September and early October to significantly strengthen Air Malta's financial position. "As indicated in the commentary issued with the statements, the Air Malta Board welcomes the recent take up of new equity by the Government of Malta. The Government has further signed an undertaking to subscribe to the second share issue of new equity that is scheduled to take place in January 2013."
On 27 September 2012, an extraordinary general meeting of the company’s shareholders took place, whereby the shareholders approved an increase in the authorised share capital of the company together with an authorisation to the Board to issue new shares amounting to just over €130 million.
The first issue of shares took place in October 2012, under which the Government of Malta subscribed to €78 million of new shares, and paid up the first call of 25.6%, amounting to €20 million.
The Government of Malta has made a commitment to subscribe to the second share issue due to take place in January 2013 amounting to €52 million. In line with the first issue, the calls for these shares will be made on a phased basis in line with the plan.
In addition, the airline has completed the sale of its Head Office site in October 2012, further enhancing the company’s liquidity position. The sale of the property, which is the first tranche in sale of the €66.2 million land portfolio, was sold for €26.7million. The net proceeds of this sale were €6.7 million, offsetting the €20 million deposit received.