Last Updated 11 | 01 | 2013 at 10:10

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UPDATED: Air Malta posts operating loss of €30 million

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Air Malta has posted an operating loss of €29.8 million for the year ending March 31, 2012, representing an improvement of €4.3 million over the year ended March 2011 of €34.1 million.
The Chairman of Air Malta Louis Farrugia said that were it not for the restructuring plan that is being implemented and the increase in the average price of fuel, the company would have had an operating performance improvement of €20 million.

Louis Farrugia said that the company managed to increase its revenue by €7 million to €214 million through a number of commercial initiatives including an improved yield, improved seat factors together with the commencement of various ancillary revenue programmes. These initiatives alone drove a gross improvement in revenue of over €20 million.

But as part of the Restructuring Plan approved by the European Commission, during 2011 Air Malta was obliged to reduce significantly its capacity that translated into an estimated reduction in profitability of €4 million.

At the same time the average price of fuel during the year ended March 31, increased by 30%, significantly increasing fuel costs for the year by €17 million. The company has now adopted a stronger fuel hedging policy allowing it to protect its fuel cost for the present year.

Air Malta will not be reducing further capacity – Air Malta CEO

The Chief Executive of Air Malta Peter Davies today confirmed that Air Malta will not be reducing further capacity since the company has now achieved the targets set by the European Commission regarding capacity and slots.

Peter Davies said this when the annual accounts of Air Malta for the year ended March 31 were presented to the media at the end of the Annual General meeting of the company. He said that until Air Malta starts posting a profit it cannot fly to any new destinations within the European Union. The same does not apply to destinations outside the European Union, where decisions to include new routes would be strictly of commercial nature.

Air Malta has posted an operating loss of €29.8 million for the year ending March 31, 2012, representing an improvement of €4.3 million over the year ended March 2011 of €34.1 million.

The Chairman of Air Malta Louis Farrugia said that were it not for the restructuring plan that is being implemented and the increase in the average price of fuel, the company would have had an operating performance improvement of €20 million. He said that the company managed to increase its revenue by €7 million to €214 million through a number of commercial initiatives including an improved yield, improved seat factors together with the commencement of various ancillary revenue programmes. These initiatives alone drove a gross improvement in revenue of over €20 million.

But as part of the Restructuring Plan approved by the European Commission, during 2011 Air Malta was obliged to reduce significantly its capacity that translated into an estimated reduction in profitability of €4 million.

At the same time the average price of fuel during the year ended March 31, increased by 30%, significantly increasing fuel costs for the year by €17 million. The company has now adopted a stronger fuel hedging policy allowing it to protect its fuel cost for the present year.

Air Malta now aims to achieve a further improvement in performance hoping that by the end of the present financial year it would have reduced its operating loss to €15 million. The Chief Financial Officer of the company Nick Xuereb said that this is achievable because the company has hedged well on 79% of its fuel need at a price of US$ 109.44 per barrel. The decrease in operating loss will also be achieved due to an improvement of €10 million in revenue, an increase in the passenger yield from €105 to €106, an increase in the load factor and ancillary revenue.

Peter Saunders said that in the near future the company will be introducing a cost for the second baggage that will go in the hold, as a means of furthering its income. At the same time Air Malta aims to reduce its pricing policy by the end of October to offer its clients better flexibility. He said that were such pricing policy is in place, there has been a positive impact.

Air Malta also plans to increase the chillers capacity in order to accommodate companies that need such facilities for their cargo, especially companies exporting pharmaceuticals and fish.

Asked if there was interest in the purchase of Selmun Palace Hotel, Mr Louis Farrugia said that a number of companies and people have expressed interest but added that it was still early days to say if a sale will be concluded or not.

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