TMID Editorial: KM Malta Airlines and partial privatisation

Finance Minister Clyde Caruana has indicated his preference for the private investor that will have to be found to take up a one-third stake in KM Malta Airlines to be another airline.The partial privatisation was a condition of the setting up of the

By: independent.com.mt

Nov 05 2024
34
0 Views

TMID Editorial: KM Malta Airli

Finance Minister Clyde Caruana has indicated his preference for the private investor that will have to be found to take up a one-third stake in KM Malta Airlines to be another airline.

The partial privatisation was a condition of the setting up of the new airline during discussions between the government and the European Commission.

Caruana wants whoever is interested to ensure two things. "A certain level of knowhow within the industry, as that would be an added benefit, and secondly, good governance. What led to the precarious situation of the previous airline was the lack of good governance in the day-to-day operations. It is meant to be a company that operates along private-business lines, and it has to do so in order to remain in business."

Of course, the Finance Minister said that "we have to see what comes along". He did not provide a deadline regarding when this partial-privatisation will be expected, except to say that "it is something that I would like to pursue over the coming years," and that "it has to be done quite early on."

There is an argument to be made for local private investors to become shareholders in the airline, such as keeping the airline in the hands of the Maltese, and knowing that ensuring Malta's interests are a top priority for all shareholders and not just government.

However, there is a strong argument to be made in favour of it being a foreign airline.

First of all, government having a partner with experience in the aviation sector could help KM Malta Airlines make better plans to ensure the long-term success of the airline, and it could lead to better knowhow and foresight that would be of added benefit, in addition to opening up other possible opportunities, such as better connectivity through cooperation between the Maltese airline and the other airline. But this will only work if the right foreign airline partner is found. It must be a partnership that would be of benefit to KM Malta Airlines, and to Malta. A larger air carrier could provide such benefits.

But on this point the government, which will remain the majority shareholder, must ensure that the Maltese air carrier does not end up just being used as a tool for the eventual private investor to bolster their own airline.

There will also be the problem of finding such a partner. When Air Malta was still around, the government had tried to find a strategic partner, and that failed. The new national air carrier doesn't have all the baggage that Air Malta had, so that should make such an opportunity more attractive.

Regarding the good governance point that the minister raised, he is absolutely right. Air Malta failed because it wasn't treated like a business, was bloated with excess staff and wasn't interested enough in being run like a business. The same mistakes cannot be repeated with KM Malta Airlines.

There is also little trust in government contracts at the moment after the hospitals deal. All eyes will be on this deal when eventually it is made, and the partner must be of benefit to Malta, not the other way around.