Air Mauritius posts losses in line with forecasts. The transformation programme well under wayResults in line with forecasts In line with the guidance issued when the third quarter results were published, full year results of Air Mauritius are consisten
In line with the guidance issued when the third quarter results
were published, full year results of Air Mauritius are consistent
with the first nine months of the year. The airline posted a
€29.2 million net loss for the full year 2011/12.
Hit by a stagnant airline industry in general and a slowdown in
tourism in Mauritius – reflecting problems in Europe in
particular, the fourth quarter net loss of €8.3 million comes on
top of the €20.9 million net loss for the nine months ended 31
December 2011.
Air Mauritius is suffering from the global economic crisis
On 31 May 2012, the International Air Transport Association
(IATA) published global and regional results of all world airlines
for the period January to March 2012. The global industry’s
operating earnings plunged 51% on net losses of over $1.5
billion. The European airlines alone account for $1.7 billion of
losses.
Earnings dragged down by fuel costs
Consistent with all airlines, the surge in fuel prices directly
impacting operating costs held back the airline’s earnings the
most. The year-on-year increase in Air Mauritius’s fuel costs
alone amounted to over €47.8 million.
Strong sales despite competitive pressures and lower
demand
The airline’s third quarter performance is consistent with the
full year performance. While the total number of tourists
visiting Mauritius grew 1.7%, Air Mauritius, despite tough and
growing competition, managed to carry 1,324,613
passengers, up 2.3% and an all time record. While these
sales bolstered the airline’s status as the main carrier for the
tourism industry, they were achieved at the expense of a
lower load factor of 77.1%, down from 79.8% in 2010/11.
Implementation of the transformation programme
The first step of the transformation programme pertaining to
streamlining of aircraft operations and network optimisation
have given Air Mauritius a strong basis for turning around its
results.
Suspension of flights servicing Milan, Sydney and Melbourne
at the end of May, Frankfurt and Geneva at the end of August
and Durban at the end of October will result in major savings
in operating costs. Meanwhile an increase in frequencies to
high growth markets in the Indian Ocean Rim countries and
Asia, will enable the airline to minimise operating costs and
generate new revenues, while also boosting sales through the
airline’s hub strategy and reinforced revenue management.
With regard to costs, several initiatives have been identified
and implemented.
Outlook for 2012/2013
Management expects all these improvements to flow through
to the bottom line from the second half of the financial year. If
external factors do not deteriorate, the airline is expected to
post considerably lower losses at the end of the financial year.
The company will however need to remain vigilant, all the
more so that the annual general assembly of IATA in Beijing
this week, raised the alert on the downside risks posed by the
European sovereign debt crisis – which is now the main
challenge of the airline industry for year 2012/2013.
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Source: Air Mauritius
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