A Disaster That Was Waiting To Happen
Air Mauritius has accumulated additional debts of around Rs 800 million since it has been placed under voluntary administration on April 22, and it would require an injection of Rs 10 billion to keep it afloat. This was revealed yesterday at a press conference held by Sattar Hajee Abdoula who, together with Arvindsingh Gokhool of Grant Thornton, has been tasked with the voluntary administration exercise. The coronavirus pandemic has only made matters worse for MK, he said, adding that the situation at Air Mauritius is “very, very serious”. Further, he reassured that “our role is to save the company and not to close it”, adding that a “watershed meeting” is planned for early December when the company’s creditors will be called to take a vote on the administrators’ proposals. Their rejection would mean that the company must be handed back to management or placed in liquidation, stated Mr Abdoula, though it would seem to him that its liquidation appears to be the most likely possibility.
In the meantime, there is a sense of deep frustration and anger that is being heard from the first collateral victims of the financial crash of the company — the hundreds of former long-serving employees, especially those having completed 33 years and 3 months of service, and whose distress can be gauged from a social media post in circulation during the last few days. “We are not responsible for the hedging saga which cost the company billions of rupees, the succession of CEOs appointed by all Governments, traffic rights granted by successive governments to Emirates, Turkish Airlines, Saudi Arabian Airlines, Kenya Airways, etc, successive governments’ interference in the acquisition of aircraft, the latest one resulting in surplus capacity and in the loan of two brand new aircraft to SAA. We are paying the heavy price of these actions.”
In this edition’s interview, Megh Pillay who is well aware of the inside out of the company for having served two tenures as CEO until he was summarily dismissed in the wake of a power struggle, blows the lid off the goings-on over the years that have brought Air Mauritius to its present predicament: dereliction of duty on the part of past board directors, corporate governance issues – “the very root cause of MK’s downfall” whereby “board and management were hijacked by Shadow Directors, persons not on the Board but actually instructing one or two who then take over Management duties by delegating all executive powers to Board Committees and not subjected to the rules of accountability”.
To all these can be added the unsustainable debts and liabilities towards lenders and aircraft lessors, compounded by MK’s decision to acquire two A350-900. This, notwithstanding the fact that “it was clear that MK had no plan to exploit the expensive aircraft that it had ordered, despite it being common knowledge that aircrafts must be flying to cover their costs”. A long list of terrible mistakes inside an erstwhile efficient and profitable airline which has been subjected to a lot of unwarranted interferences that hampered its efficient operation. The cherry on the cake – if one can put it this way – is the appointment by the Board of Directors of MK of the Joint Administrators, who belong to “the same firm that carried out due diligence on Air Mauritius and certified its level of solvency to enable shareholders to make informed decisions on the capital restructuring less than 10 months earlier”.
At one time in its history, Air Mauritius held out the promise that it would become an important cornerstone in the international destiny beckoning our island. Somewhere down the road, things suddenly took a turn for the worse. The finances of the company ceased to be brilliant despite a persistent increase in passenger and goods traffic. Successive managements however failed for different reasons but mostly on account of good governance issues and political capture of decision-making to uphold the airline as they should have.
If we take at face value the averments of the administrators at the press conference, one can infer that top political brass must bite the bullet to make good the promises of a re-engineered airline that can continue to serve the strategic interests of the country on a safe commercial basis.
Under the circumstances, the decision makers at the highest political level must re-assume their responsibility. The time has come to shed political egos and to rope in the best managerial and technical talents that this country undoubtedly possesses so as to save Air Mauritius from going into an irreversible nosedive.
* Published in print edition on 2 June 2020