Malta MedAir (MT, Malta International) may be liquidated together with sister carrier Air Malta (Malta International), according to an alleged secret government plan to create a new national airline later this year, reports The Shift independent news platform.

Malta MedAir was not immediately available to comment.

Sources close to Malta's finance ministry told The Shift newspaper that finance minister Clyde Caruana has now also decided to axe Malta MedAir, and make all its employees redundant, to start a new national airline from scratch later this year.

As reported, this allegedly forms part of a covert government backup plan to liquidate Air Malta should the European Commission (EC) not approve Valletta's request for a EUR290 million euro (USD297 million) state-funded rescue for the flag carrier.

The detailed plan has allegedly already been approved by Prime Minister Robert Abela and is being discussed in Brussels. It foresees a new national carrier taking over all of Malta MedAir's assets, particularly its London Heathrow and London Gatwick slots valued at EUR50 million (USD50 million). These assets are to be used as collateral to obtain financing for the new airline from commercial banks and other financial institutions. Malta MedAir has a fleet of three leased A320-200s with three A320-200Ns on order, the ch-aviation fleets module reveals.

The plan would mean redundancy for all employees at both airlines, with some rehired by the new airline, albeit at lower salaries.

However, at a press briefing on August 23, Caruana insisted that Air Malta's restructuring process was on track as announced in January 2022, reported Malta Today and The Times of Malta. "What went wrong? Nothing! We're still on track with respect to what I said in January [2022]." This, he reiterated, was the closure of the airline's ground handling business and the transfer of 574 jobs from Air Malta to other public service positions. "The only thing we've done since then is to include another option for those employees who would like to take a lump sum and find a job elsewhere - that option is now on the table as well," he said.

Asked about the alleged backup plan, Caruana said plans for the airline were being discussed with Brussels. "Once I have an agreement with the [European] Commission, I will be the first person to make those plans public," he said.

"But with respect to the original plan that we had for the airline - that plan is still there and will continue to be implemented in the coming weeks and months," he stated.

Asked for comment, Air Malta's executive chairman David Curmi said: "Neither Air Malta nor its shareholder, the Government of Malta, have issued any formal communication triggering the current media speculation about Malta's national airline. Air Malta's current schedule and its forthcoming winter and summer 2023 schedule remain on sale to operate as planned. Other than the currently expected airport disruptions around Europe, there are no issues with Air Malta delivering its flying programme, and to date, Air Malta is one of the very few airlines that has not cancelled any of its scheduled flights. Bookings continue to be extremely strong with expectations that September will follow the July and August trend of operating more than 90% full."