The government sold its stake in Malta Air for €25,000, Times of Malta has learnt, with a Konrad Mizzi-era agreement giving Ryanair the right to take full ownership of the airline after five years.
Malta Air was set up to great fanfare in 2019, with Ryanair’s holding company Gulliver Holding Ltd owning all of the company’s shares, except one. The government retained a single golden share which granted authorities rights over the company name, as well as a veto over any possible sale of the airline.
However, authorities failed to disclose that the agreement between Gulliver Holding Ltd and the government included a clause effectively giving Ryanair the automatic right to buy out the government’s golden share five years later for a fixed sum of €25,000.
The agreement, seen by Times of Malta, was signed on June 11, 2019. Five years (and one day) later, the company was entirely in Ryanair’s hands, with the airline giant completing its takeover of the government’s golden share on June 12, 2024.
Ryanair had informed the government of its intention to exercise the takeover just under a month earlier, in a letter sent to authorities on May 16, 2024.
After “exploring all options”, sources say that tourism authorities concluded that they had no choice but to respect the contract and go along with the sale.
The agreement’s clause 2, titled ‘Call Option’, says Gulliver has “the right but not the obligation” to purchase the government’s golden share on a date “not earlier than five years from the signing of this agreement”.
The contract goes on to say that, upon notifying the government of its intentions, Gulliver has the right to “require GoM to sell to Gulliver”.
As is customarily the case, the agreement was signed by then-tourism permanent secretary Ronald Mizzi.
Mizzi’s name hit the headlines in recent weeks after he was reinstated to public office by Prime Minister Robert Abela. Mizzi had resigned from public office last year when faced with charges of fraud in the wake of the Vitals investigation.
However, his resignation was short-lived, with Abela reinstating him earlier this month, saying he was “totally convinced” of Mizzi’s innocence.
Although the contract was signed by tourism authorities, it makes it a point to “acknowledge that the exercise of the Call Option has been approved by Cabinet”.
Golden share was ‘to monitor company’s set-up’
When contacted for comment, Mizzi, at the time transport minister, said the setting up of Malta Air was carried out “with the support of my government colleagues, cabinet and the prime minister” in close collaboration with Ryanair head Michael O’Leary and eventual Malta Air CEO David O’Brien.
“Despite no capital investment from the Maltese government, we insisted on having a golden share in the new airline with a nominal value of one euro, which needed to be retained for five years,” he said.
The reason behind the golden share, Mizzi said, was to “ensure the stable development of the company in Malta over a period of five years and to ensure the operation was grown in Malta”.
“To be clear, the share enjoyed no economic rights such as dividends or rights to assets on liquidation and was requested by government as a special policy tool to monitor implementation by the private investors and to ensure the benefits to the country were maximised,” Mizzi said, adding that the government wanted to be certain that Malta Air “would not be a brass plate company”.
“And the objectives were accomplished to the full in the subsequent five years,” he said, describing Malta Air as “a major success story”.
Mizzi argued that “this strategic move enabled the operation to grow sustainably, delivering long-term benefits to the Maltese economy”, registering over 180 aircraft in Malta, carrying almost five million passengers across 68 routes and driving up traffic by 11%.
“The Malta base alone represented an investment in excess of $800m and supports thousands of jobs in Malta’s economy,” Mizzi said. “Far from being a brass plate entity, Malta Air is a tangible and thriving enterprise. It stands as a proud achievement of an initiative that has already delivered significant results for Malta and promises even greater benefits in the future.”
‘A tough, business focused-negotiation’
Malta Air was established in the summer of 2019, with Mizzi having described the airline’s launch as “an opportunity to celebrate ingenuity, innovation and investment”.
The move meant that Malta Air would operate six of Ryanair’s aircrafts under the new airline’s brand, also setting up hangar facilities for repair and maintenance in Malta.
The airline promised that it would create 350 jobs in Malta and gradually expand its fleet from six aircraft to 10 within three years.
Despite holding a golden share in the company, the government had little input in its day-to-day operations, nor did any government representatives have any executive powers in the company.
“It was a tough, business-focused negotiation with Ryanair, but I believe we’ve won a great deal for Malta,” Mizzi had said at the time.
“We have introduced a golden share in this investment that protects Malta’s interests,” he added. “Effectively, it is our guarantee that gives our country a competitive advantage for the future. The golden share practically means that we will retain the investment by Ryanair in Malta as a fully-fledged airline”.