Despite the difficult time for aviation, Air Malta Group has registered a remarkable operating profit of Lm5.3million…
Despite the difficult time for aviation, Air Malta Group has registered a remarkable operating profit of Lm5.3million. The airline increased its market share from 57% to 64% in spite of intensified competition, while robust performances were also attained in its tax-free and tour operating business. Group turnover amounted to Lm174 million for the 16-month period ended July 2002. Turnover for the year ended March 2002 was Lm126 million, an increase of Lm2 million over the same period the previous year.
The Group reported a profit before tax of Lm332,000 compared to a loss of Lm3.7 million in the year ended 31 March 2001. This positive result was achieved after the company had absorbed in its accounts a loss of Lm26 million (comprising a staggering Lm19 million impairment loss on the 7 RJs, and a Lm7 million, share of the loss in AZZURRAair.) The company attained a Lm23 million surplus through the sale of its other aircraft in the ILFC deal, which together with the operating profit earned served to offset losses on other assets.
In five years Air Malta reduced its borrowings by Lm68 million. Group debts were reduced from Lm81 million in 1998 to Lm59 million as at March 2001, further reduced to Lm29million as at the end of July 2002. Group borrowings currently stand at Lm13million. As cash and bank balances increased from Lm27 million in 2001 to circa Lm41million as at 31 July 2002, the balance sheet was strengthened with a rise in the liquidity ratio. The airline experienced spiralling costs (particularly in insurance, security and fuel) and falling demand and yields. Exchange rates also negatively impacted Air Malta`s financial performance. To combat the situation, Air Malta embarked on initiatives, including security enhancement, cost control, revenue generation, route rationalisation, cash conservation and containment of risks such as fuel price-hedging. The company emerged from this period without shareholders` intervention or employment termination.
Air Malta brought to fruition projects such as the fleet transaction with ILFC, advantageous long-term leases for a fleet of 12 new aircraft, and a hefty IT infrastructure investment. The company re-structured costs (primarily with the Lufthansa Technik strategic Joint Venture agreement.) Stable industrial relations led to the conclusion of Collective and other Agreements.
The outgoing Chairman Mr Louis Grech announced that Air Malta is soon to join a Global Alliance. Mr Grech concluded his Annual Report by stating; In the past few years we have positioned our company on a strong, solid basis. We have tried to build a framework relevant to the present harsh realities and ready for tomorrow`s stiff challenges. I am confident that we will continue to remain a major driving force of the Maltese economy, especially in tourism. It would be very foolish to assume that the company does not have weaknesses. However I feel that we have been effective in implementing the necessary strategies and have taken decisions which addressed deep short term crisis hitting aviation as well as the Group`s long term goals.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
