Air Malta Advises union representatives of termination of employment of 58 employees at Selmun Palace Hotel

“This is the first of some difficult decisions being taken by the Board of Directors to save the airline and hundreds of jobs at Air Malta,” said Peter Davies, CEO Air Malta

Air Malta has advised the union representatives of the 58 employees at the loss making Selmun Palace Hotel, a subsidiary of Air Malta Group, that the hotel will be sold and that their jobs will be terminated. The decision has been taken during the first meeting of the new Board of Directors, chaired by Louis Farrugia.

Air Malta has also advised union representatives on the developments and outlined a way forward. Formal consultations will commence next week. The airline also advised the Director of Employment and has discussed this issue with him. Air Malta will be honouring the collective agreement and the law and the employees will receive their termination payments accordingly.

Air Malta said that the decision is in line with the objectives set by the new restructuring plan to significantly cut cost and for the airline to focus on its core areas of business. Selmun Palace Hotel has accumulated losses of over €13 million. The hotel had ceased operations on January 3rd of this year, however the airline was still incurring significant expenses related to wage bills, licences, insurance and other expenses. The employees were officially communicated the decision in a meeting held this afternoon.

Air Malta Chief Executive Officer Peter Davies said that terminating jobs of employees was a very tough decision and a last resort, “This is naturally a very difficult day for the Selmun Palace employees and also for Air Malta. It is always extremely hard to terminate jobs but the national airline did not have any option. I have to stress that the airline had tried to sell the hotel as an operating concern, in order to save the jobs of employees, but such attempts were not successful. This is one of the first important decisions being taken by the Board of Directors to save the airline and hundreds of jobs at Air Malta. It is very important for the national airline to take challenging decisions now in a bid to significantly cut costs and also to raise its revenue from core business.”

Mr Davies said that the decision to terminate the jobs of the employees working at the Selmun Palace Hotel does not necessarily mean that this is the method that the national carrier will be adopting to reduce the airline’s workforce, “It has already been announced that as part of the restructuring process Air Malta will be reducing its workforce. In order to avoid unnecessary speculation, I have to stress that the Board of Directors realises that there is a difference that has to be made between Air Malta employees and employees of an independent subsidiary company not operating in the aviation industry. At the same time, no decision has yet been made and all options are still being considered as to the method that the airline will be adopting to reduce its headcount. I would like to sincerely make an appeal to all stakeholders involved to avoid speculation that can cause unnecessary distress amongst Air Malta employees.”

Air Malta stated that all financial creditors’ balances of the Selmun Palace Hotel will be settled in full.

Meanwhile the airline will be embarking on a local and international process to sell the property and/or company. The airline will be engaging with local estate agents to advertise the property through their international network so as to maximise the value and proceeds of the sale.

Mr Davies said that a decision has been taken to advertise the property in Malta and abroad: “Selling the Selmun Palace Hotel is also critically important for the airline as the revenue generated from the sale will offset the accumulated losses and will also assist Air Malta in its current restructuring exercise. Selmun Palace Hotel is a strategically located hotel and an excellent asset and Air Malta will be doing it’s very best to maximise the revenue it can generate from its sale.”

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