Air Mauritius posts €29.2 million net loss for the full year 2011/12

Joint Statement from the Chairman of the Board and the Ag CEO

“The results announced today are a reflection of the daunting challenges faced by the airline industry over the past year – European debt crisis and its impact worldwide, the high price of fuel, volatility of exchange rates Euro/Dollar and increased competition among destinations worldwide. All airlines have been affected and Air Mauritius is no exception.

Against this backdrop, it is gratifying to note that our company carried a record number of 1,324,613 passengers and generated a record operating revenue of Euros 450,9 million.

The company anticipated the challenges posed by the toxic combination of the above factors and took the initiative to review its business model at the start of the financial year while the Board and Management teamed up to address the short term performance. The business model review has yielded a seven-step plan which we have started to implement since mid February 2012. The implementation of the plan is our focus moving forward and all team members are standing together to ensure that we start seeing the results of the initiatives from the second half of the financial year.

Subject to no deterioration in external factors (European debt crisis, fuel prices and exchange rate Euro/Dollar), the company’s transformation plan is expected to considerably reduce our losses this year. It is important that we remain vigilant especially after IATA, at its AGM this week in Beijing, raised the alert on the downside risks of the European Debt crisis and its potential dramatic consequences on the world economic growth – hence on the airline industry’s performance this year.”

Air Mauritius posts losses in line with forecasts.The transformation program well under way.

Results in line with forecasts

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 program

The first step of the transformation program 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.