Under an EU agreement, Air Malta will reduce its size in exchange for state help.

The airline will discontinue ground handling activities and eliminate unprofitable routes. It will try to become a European carrier capable of flying within other nations. The restructuring aims to offer the airline a “fighting chance” of survival.

Air Malta will close its ground handling and cargo operations (which currently account for 300 workers) and reduce its routes by summer as part of an agreement with the European Commission that would allow it to receive state help and avoid insolvency, Finance Minister Clyde Caruana announced on Friday. Another 110 workers to be made redundant will come from cabin crew and administration. Caruana also addressed the issue of pilots, stating that the firm no longer needed the 131 pilots it formerly employed. He said that just 73 to 85 pilots were required to operate eight planes.

The state-owned airline has been losing money for over two decades, with total operational losses of 258 million euros ($295 million) since 2005, and its financial status has deteriorated throughout the COVID-19 crisis.

In 2018, it turned a profit, but only by selling landing slots at key airports to the Maltese government.

Caruana, who stated that half of the airline’s staff of 890 will be let off but offered other employment inside the government, did not specify how much state help would be permitted. The job-cutting strategy is expected to save €15 million each year.

The minister also commented on his meeting with numerous associated unions earlier on Friday morning, saying they shown excellent maturity and knowledge of the issue. He stated that these were in agreement with the necessary sacrifices, such as the increased flexibility anticipated of cockpit and cabin crew members in terms of remuneration and hours worked. It was also indicated that variable payment based on the amount of hours worked was a possibility.

Minister Caruana said that the government was “not anticipating ground-breaking amounts” from the European Commission, but that Brussels’ preferred option was to close the airline and create a new firm. Caruana, on the other hand, said he believed the national airline had a “fighting chance” of avoiding bankruptcy.

Brussels has not yet made a decision on the amount of state help that the government will be able to provide to the airline. In the next weeks, a decision on this will be communicated.

Last year, local media claimed that the government planned to invest €290 million in the airline, but the European Commission requested it to provide a more realistic proposal.

Air Malta was founded in 1974 and currently flies eight Airbus A320 planes to serve 35 locations on the European continent and in North Africa.