In May 2004, negotiations between the Maltese government and four trade unions representing the workforce of Air Malta resulted in an agreement which aims to return the national airline to viability, while guaranteeing that no jobs are lost.
Air Malta has been making substantial financial losses in recent years and in 2003 the Maltese government, which is the main shareholder, launched a restructuring process. Negotiations between the government and the four trade unions representing the national airline’s employees - the Airline Pilots Association (ALPA), the Union of Cabin Crew, the General Workers' Union (GWU), and the Association of Airline Engineers- proceeded for several months (MT0405102F) before resulting in the conclusion on 26 May 2004 of an Air Malta 'rescue plan agreement'. The deal, signed by Air Malta’s chair and officials of the four unions, was hailed as Malta's first 'social pact' at company level. It aims at returning the national airline to viability, while guaranteeing that none of the employees lose their job.
The agreement projects savings of around MTL 1.5 million through various cost-cutting measures and improved working practices. In addition, the plan aims at reducing operational and administrative costs by a further MTL 3.75 million. The Minister of Information Technology and Investment, who was involved in the negotiations, said that the company needs to seek new ways of increasing revenue by boosting the number of passengers.
The agreement stipulates a three-year moratorium (between 2005 and 2007) on pay increments. Subsequently, between 2008 and 2010 employees will receive double the amount of increments to compensate for the three years with no such wage increase. The agreement also sets out the principle of increased employee flexibility, together with a drop in the number of cabin crew.
The agreement sets up a works council to ensure that targets are being reached and enhance the dialogue between unions and management. This is seen as an important development in the process of social dialogue at corporate level, given that works council-type bodies are largely absent from the Maltese industrial relations system.
Further discussions will be carried out concerning early retirement schemes. In line with the government’s policy to reduce public spending, Air Malta does not envisage recruiting new employees except to fill vacancies that may occur.