Air Mauritius 1st Half and 2nd quarter ending September 2011 Financial Results

This depressed environment primarily hurts the tourist and travel
industries. As such, given that Air Mauritius is highly dependent on these
sectors, it is severely impacted. In addition, the airline’s financial health
is challenged by fuel price hikes and the volatility of the currency
exchange rates, which are more pronounced during the economic crisis.
Half year earnings hit by the economic slowdown in the second
quarter
Despite the traditional low season and as a result of rigorous
management discipline, Air Mauritius succeeded to maintain a stable
first quarter performance. However, the airline noted a marked
deterioration in its second quarter performance – €6.3 million net loss,
compared to a net profit of €4.8 million in the prior year. Consequently, a
net loss of € 17.7 million is registered for the first semester compared to
a loss of € 6.8 million for the preceding period.
The freight business registered a strong second quarter growth of 6.7%,
representing 8,175 tonnes while the global freight industry continued to
collapse.
Earnings boosted by the increased attraction of the airline and the
success of the increase in capacity
In anticipation of the economic slowdown, especially in its traditional
markets, Air Mauritius rebalanced its growth to emerging markets and
added over 35,000 seats compared to the corresponding period in 2010.
Consequently, the number of passengers rose, both in the second
quarter (up 4.4% to 336,391 passengers) and for the full half year (up
3.8% to 608,750 passengers). With a stable load factor of 78.6% in the
second quarter and 76.5% for the full half year, the airline ascertains the
success of its commercial strategy and its fleet management.
Indeed, in the second quarter, revenues surged by 8.9% to reach €116
million – albeit not enough to make up for the impact of a cost increase
of €14.5 million or 14.8% vs. prior year, which was largely caused by a
45% rise in fuel prices.
The full half year revenues surged by 8.3% to reach €208,9 million while
costs increased by €32,9 million or 18.5% v/s prioryear – the fuel bill
increasing by €24.8 million.
Outlook for the full year
Having recently worsened, the global downturn appears to have set in
for the long term. Europe, the airline’s principal market, is in the weakest
situation. The number of tourists travelling from Europe is hardly growing
and even major markets such as Italy and the UK are down. France,
which is the largest market for Mauritius and Air Mauritius, seems to be
running out of steam.
While the shift in growth over the last two years towards emerging
markets such as India, China, South Africa and Australia is reaping
rewards – they remain small in relation to the European market.
Furthermore, Air Mauritius is forced to put up with very expensive fuel
prices, volatile exchange rates – especially the euro/dollar rate, and
tougher competition leading to lower revenue per passenger. IATA, which
has been sounding the alarm bell for several months now, forecasts that
the end of 2011 and the whole of 2012 will be even more difficult and
uncertain.
Air Mauritius has begun to review its business model so as to cope not
only with the recession in the airline industry, but also the downturn in
the Mauritian tourism industry as a whole – in order to play its full and
long-term role as a strategic partner to the national economy. As such,
even though it is facing challenges it has never encountered before, the
airline is maintaining all its flights, while stepping up its efforts on all
markets and strengthening its partnerships.
All Air Mauritius team members are more than ever committed to meet
these challenges.