In the year ended 31-Mar-09, Air Mauritius posted a loss of EUR84.3 million (USD119.1 million), after dropping a hefty EUR50.8 (USD71.8) million from the unwinding of 40% of its fuel hedge portfolio – to which it had committed at a price of USD105 per barrel. By contrast, in 2008 the carrier made a gain of EUR5.8 million (USD8.2 million) on fuel hedges.
Operational performance was mixed
Total turnover increased slightly by 0.2% and while the company was able to sustain passenger revenue and yields during these difficult trading conditions despite passenger load factor reduced by 1.6 ppts to 75.2%, compared to 76.8% for the year ended 31-Mar-08 and passenger numbers declining by 9% to 1.19 million.
Excluding losses from the hedge programme, the airline posted a positive operartional results of EUR16.2 million (USD22.9 million), despite the global downturn which had a marked impact, especially during the second half of the financial year.
To achieve these results Air Mauritius worked on revenue enhancement, efficiency improvement and cost reduction actions, with capacity rationalisation of particular importance – with the airline discontinuing operations to Rome, Sydney and Zurich and re-aligning capacity to regional destinations. The number of seats offered for the year was thus reduced by 7.1%.
These measures provided cost savings of EUR22.1 million for the year, but this was offset by higher fuel costs year-on-year, excluding hedge effects, of EUR11.7 million.
Cargo uplifted during the year went down to 31,085 tons, a decrease of 15.6%.
Government assistance has been to no avail
In late Jan-2009, Air Mauritius secured a EUR40 million commercial loan with a government guarantee, to pay bills and meet day to day running costs. This fell short of the EUR50 million sought by the airline, following its disastrous fuel hedging accord.
The government stressed that the cash was not a gift, but a "bridging loan", and the airline will have to make reimbursement in full. Airline officials have indicated that in order for the company to settle all its debts, it may have to recapitalise the company by issuing new shares.
Reports have suggested the airline might sell its headquarters and put into place stringent expenditure cuts, with the hope of generating around EUR30 million.
The government of Mauritius had previously extended cash support to the airline totalling EUR90 million – made up of EUR40 million in Nov-2008 and a further EUR50 million in Dec-2007.
Modern fleet will be a good springboard for when good times come again
Air Mauritius has a mixed fleet, enabling it to efficiently cover short-haul regional destinations as well as its long-haul non-stop flights to Europe and Australia. Their hope will be that the slowing leisure market, on which they heavily depend, will turn around sooner rather than later.