18 - 24 November 1999

Air Malta considering lowering its stake in AZZURRAair

by Franco Aloisio

Air Malta is considering lowering its stake in the Italian based airline AZZURRAair, Air Malta's chairman Louis Grech told The Malta Business Weekly.

Despite this reduction, however, the Maltese airline will still remain the largest single shareholder in AZZURRAair.

Mr Grech said that this move would not be tantamount to privatisation, although Air Malta would be reducing its interests in a company in which it retains a 49 per cent stake. Heavy restructuring, he said, would be needed for AZZURRAair in order to make it profitable.

Despite not registering a profit, this last year was a very positive one for AZZURRAair. In fact AZZURRAair's losses decreased from Lm3.6m in 1998 to Lm0.4m in 1999. Air Malta is also planning to sell its seven RJ Avroliners to AZZURRAair. At present, Air Malta leases these seven planes to AZZURAair, which in turn are wet leased to Alitalia.

"We prefer selling these planes to AZZURRAair, rather then keeping them on our books," he said.

"We expect that with these two moves, Air Malta will increase its margin of profit. Both Air Malta and AZZURRAair will be having separate business plans."

AZZURRAair is the second largest operator at Malpensa Airport, Milan, in terms of flight movements. Its network consists mainly of short-haul operations within Europe. AZZURRAair is Alitalia's major franchisee.

Apart from Air Malta's seven RJ Avroliners, AZZURRAair's fleet includes a BAe 146-200, wet leased from a British company and two new generation Boeing 737-700s.