Air Malta to downsize in exchange for state aid under EU deal

VALLETTA, Jan 14 (Reuters) - Air Malta will shed its ground handling and cargo operations and cut back its routes under a deal with the European Commission to allow an injection of state aid, saving it from bankruptcy, Finance Minister Clyde Caruana said on Friday.

The state-owned airline has made losses for nearly all of the past 20 years, with combined operating losses of 258 million euros ($295 million) since 2005, and its financial situation has worsened during the COVID-19 crisis.

It made a profit in 2018, but only by selling landing slots at major airports to the Maltese government.

Caruana, who said the half of the airline's workforce would lose their jobs but be offered alternative employment within the government, did not reveal the amount of state aid that would be allowed.

Local media reported last year that the government wanted to pump 290 million euro in the airline but the European Commission had asked it to submit a more realistic request.

Air Malta was set up in 1974 and flies to 35 destinations on the European mainland and in North Africa. It employs nearly 900 staff and operates eight Airbus A320 aircraft.

($1 = 0.8750 euros)

(Reporting by Christopher Scicluna; editing by John Stonestreet)

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