Air Mauritius performance disappoints with Eur 22.9 mn losses as Euro depreciates
Mauritius’ national airline company, Air Mauritius Ltd, recorded losses of Eur 22.9 mn upon depreciation of the Euro and increased costs associated with higher level of operations.(Image:ionnews.mu)
Air Mauritius Ltd posted losses of Eur 22.9 million for the year ended 31 March 2015, compared to profits of Eur 8.5 million in 2014.
The revenue of the group inched up 0.9% to reach Eur 465.7 million, however, a high level of operating expenses of Eur 465.7 million was recorded mainly because of depreciation of the Euro and increased costs associated with the higher level of operations.
Inclusive of the hedging policy of the Company, the increased operating expenses were partly mitigated by lower average fuel prices that prevailed during the last quarter of the financial year. Consequently, gross profit fell from Eur 32.1 million to Eur 12.5 million.
Operating losses stood at Eur 16.4 million compared to operating profits of Eur 7.3 million in 2014, and, finally, losses stood at Eur 22.9 million for the full year to 31 March 2015.
The lack of vigour of the Euro against the US Dollar and the Mauritian Rupee proved expensive for the national airlines.
The EUR/USD parity moved from 1.38 at the start of the financial year to 1.08 at 31 March 2015. Thus, when compared to the previous year ended 31 March 2014, the net negative impact of the depreciation of the Euro cost Air Mauritius Ltd Eur 25.6 million.
Added to it, weekly frequency to mainland China increased to 5 during the year as compared to only 3 direct weekly flights during the previous year. However, these operations have not yielded the expected outcome, resulting in a significant drop in the passenger load factor from 77.4% to only 65.2% when compared to the previous year.
In addition, the company also suffered from a significant drop in market share on the local market because of intense competition. Local market passenger revenue decreased by Eur 6.8 million compared to last year
It is the combination of all these factors that led Air Mauritius to record a loss of Eur 23.7 million during its financial year ending 31 March, 2015.
This poor financial result has prompted the board of directors of the company to adopt a new plan of transition that will focus on cost-cutting operations, an increase in the income of the company through a more aggressive strategy with regard to it’s main clientele, principally Mauritians.
These changes, however, will be effective only if they are accompanied by the modernisation of the ageing fleet of Air Mauritius, as, in their current state, the planes of the national carrier consume too much fuel and the maintenance cost is high.
Finally, the company has implemented various initiatives to boost traffic on its network in the wake of fiercer competition on major routes and is taking all necessary steps to further reduce its cost base. Finally, the company is committed towards restoring profitability in the next financial year.