Malta will get a new national carrier - KM Malta Airlines (KMM, Malta International) - by March 31, 2024, replacing loss-making Air Malta (KM, Malta International), according to an announcement by Prime Minister Robert Abela and Minister for Finance and Employment Clyde Caruana.

Initially, the government of Malta will be the sole shareholder of the new entity, which is pending regulatory approval from the Maltese Civil Aviation Directorate. In all, EUR350 million euros (USD370 million) will be injected into it of which EUR50 million (USD53 million) will be working capital and EUR300 million (USD317 million) will be in the form of assets, the Malta Independent newspaper reported. After three years, as agreed with Brussels, the government will start to seek a strategic partner but retain majority shareholding.

Speaking at a news conference on October 2, Abela told reporters that the transition will be "largely seamless". The new flag carrier will implement a five-year business plan focused on profitable routes and a well-planned fleet for long-term financial sustainability. Air Malta's workforce and fleet size will be retained, prioritising sustainability and aligning with environmental goals. However, unprofitable routes will be cut, reducing the current network from 37 to 17 key point-to-point routes and codeshare partnerships that support Malta's tourism industry and connectivity.

KM Malta Airlines will operate a single-type fleet of eight A320-200Ns in a two-class configuration.

Caruana explained that the new arrangement had been agreed with the European Commission due to challenges Air Malta faced in becoming financially viable without state subsidies. The government sought permission from Brussels two years ago for a further EUR290 million (USD319 million) for the airline, but the Commission required a more realistic request. Reports that Valletta had a backup plan to establish a new flag carrier first emerged in 2022.

Air Malta has recorded losses for almost two decades, accumulating operating losses of EUR258 million (USD295 million) since 2005. The pandemic further exacerbated its difficulties.

"In the absence of a solution for the capitalisation of Air Malta plc within the parameters of EU state aid rules, it has been decided to establish a new airline with a clean sheet - a new airline that builds on the many strengths of Air Malta but with a strong focus on long-term financial sustainability," Caruana explained.

Significant work was undertaken with international industry experts to develop a credible business plan that was also shared with Brussels, he added. Profitability was forecast by 2025.

Air Malta will cease operations on March 30, 2024, and the new airline will take over from March 31, 2024. Customers with flight tickets after March 30 will be refunded by Air Malta and can book with the new airline from December 1, 2023.

According to the ch-aviation fleets module, Air Malta's current leased fleet comprises six A320-200Ns and three A320-200 including one wet-leased unit from Avion Express Malta (4X, Malta International). According to the Malta Independent, the new company will own some of its aircraft instead of leasing all. Other assets will include a hangar in Malta and land. The new entity also plans to buy back London Heathrow and London Gatwick slots from Malta MedAir (MT, Malta International).