► MAURITIUS: Despite record passenger numbers, Air Mauritius still in the red for Q1 2012.

Despite having increased passenger numbers by 7.4 % on Q1 2011 to 292'449, persistently high global oil prices coupled with the Eurozone crisis have eaten away at Air Mauritius' (MK) profits for the first quarter of the 2012 Financial Year. Overall the company posted a net loss of €10.4million - a 12% improvement on the airlines' performance in 2011 - which it claims, would have been significantly less at just €2.4million had it not been for a weaker Euro/US Dollar exchange rate.

Euro/US Dollar Exchange Rate from 2007 on. (ECB)

  

Air Mauritius 1st Quarter April-June 2012/2013 Financial Results Summarized:

- Figures For Q1 2012 (% Change on Q1 2011)

• Net Results: - €10.4million (+12%)
• Operating Revenue:  €104.5million (+12.5%)
• Operating Overheads & Costs: €108.4million (?)
• Number of Passengers Carried: 292'449 (+7.4%)
• Capacity Deployed:  430'106 seats (+9.1%)
• Overall Load Factor: 74.9% (+ 0.8%)

Causes:

• High Global Oil Price
• Weaker Eurozone economy (historically Mauritius' main tourist base)
• Weaker Euro/US Dollar Exchange Rate

 Source [Air Mauritius]

Air Mauritius' laments about high oil prices and a weak Eurozone economy were echoed earlier this week when Kenyan airline, Kenya Airways, posted a 57% drop in its profits for Q1 2012.

Andre Viljoen (FM)

In July, Acting CEO Andre Viljoen outlined a 7 Step Plan designed to return the ailing Mauritian flag carrier to the black, which made reference to looking for a strategic partner/investor to help it in its fleet renewal plans (that is, to be rid of its A340s by 2017 at the latest, and for them to be replaced by more fuel efficient and therefore cost effective aircraft such as the Boeing 787 Dreamliner or Airbus A350) in addition to having made various route rationalizations and cancellations with particular emphasis on axing dwindling European routes, whilst focussing more on its Far East routes.

Additionally, much greater focus will be paid to improving Air Mauritius' customer service and hospitality so as to achieve a higher Skytrax (a UK based consultancy firm that provides for airline and airport review and ranking) rating, currently showing Air Mauritius as a 3-Star airline:

"The implementation of our 7-step plan has now reached cruising speed and we are all mobilised to ensure we get the first results of the recovery steps during the second semester. Of particular importance is the project we have launched recently with the assistance of Ron Kaufman, world renown expert in the field of customer excellence, and his Up Your Service organisation, and which relates to our customers’ experience. This project involves all team members of Air Mauritius and is designed to improve our service delivery at all touch points as we target 4- star status on the Skytrax scale. "

Source [Air Mauritius]

Troubled Reunion-based carrier Air Austral (UU) announced recently that it is evaluating a joint partnership with Air Mauritius with regards to services to Australia as part of its cost cutting measures.

Overall, the results come as no surprise - the global economy is still in the doldrums and with oil prices still above the USD$100/barrel mark, it seems many global carriers, and in particular the Indian Ocean carriers, are going to find the going particularly tough in 2012/2013, though the cloud may have a potential silver lining in that airlines will be forced to step their game up if they want to remain relevant and therefore viable in a market that is fast becoming dominated by aggressive Middle Eastern carriers like Emirates, Qatar Airways and Etihad Airways.