Air Mauritius reduces its losses for the 1st Quarter

The airline industry continues to bear the brunt of the global economic crisis and reduced or even negative growth rates as a result of the deteriorating business and customer confidence. Additionally, the fall in the price of Brent fuel below the USD 100 mark per barrel has been short lived with the spot rate swinging uptrend again and averaging at around USD 110, a high price for airlines.

The depreciation of the Euro against the Dollar has resulted in a deterioration of the financial performance of European airlines as well as those, who as Air Mauritius have a substantial portion of their operations in Europe.

Customer behaviour has been inclined towards prudence in the face of an uncertain global economy particularly in Europe. The continent’s economy remains the most affected and hope for recovery in the foreseeable future is slim.

Mauritian tourism, which depends to a large extent on arrivals from Europe, has consequently registered a slump of 11% for the first quarter.
Air Mauritius shows resilience with a slight improvement of its results

Air Mauritius anticipated these challenges given the vulnerability of the European markets and had proactively taken steps to rebalance its operations to countries of the Indian Ocean rim and Asia. The suppression of long haul operations and the reinforcing of the network around short and medium haul hubs, as announced last February, will enable the company to speed up the rebalancing exercise although the impact will only be felt in the second semester.

The first quarter results are therefore in line with forecasts, the company posting losses of EUR 10,4 million (a slight improvement of EUR 1,5 million over the corresponding period of the last Financial Year). This reflects the grim of the tourism and the airline sectors. The fuel bill remained stable but the unfavourable Exchange Rates namely that of the Euro/Dollar weighed down the accounts by EUR 8 million compared to the last Financial Year. Had the exchange rate hovered at comparable levels to the previous year, the company would have posted losses of EUR 2.4 million for the quarter.

The commercial performance reaches new heights
The number of passengers increased by 7.4 % to reach a record 292,449 with capacity deployed increasing by 9.1% to reach the record number of 430,106 seats. Tourist arrivals increased by 2% for the quarter. Air Mauritius’ market share increased in spite of intensifying competition hence giving the airline comfort that its commercial strategy is on the right track. The passenger load
76% factor of 74.9 % is within the range of the yearly first quarter performance. Operating revenue climbed by 12.5 % to reach a record of EUR 104.5 million. These results confirm the market:
74% leader status of the company and also as the main partner of the
tourist industry. It also brightens the perspective for the rest of
the Financial Year. 72%
Focus on the Restructuring Plan to build resilience against a challenging environment
70% Implementation of the Restructuring Plan is progressing satisfactorily with several milestones completed with respect to the network, the commercial function, revenue management and
68% cost reduction initiatives. A vast customer service project has been launched and an education programme involving the whole organization is well in motion.

66% The results of all these projects should be felt in the second half of the current Financial Year –The company being fully committed and all team members working hard to restore the company’s finances at the earliest.

However, a persisting uncertain global economic climate with Europe particularly challenged (with its known consequences on tourism and long haul travel), aggressive competition, volatile oil prices and volatile Euro/Dollar exchange rates call for increased vigilance at all times.