MK under Voluntary Administration
Following the debacle of South African Airways and Virgin Australia going into external administration on Tuesday (crushed by a $4.8bn debt mountain and failing to secure a federal government bailout) in the wake of the coronavirus pandemic, it was to be expected that sooner or later Air Mauritius would raise the alarm about its current financial predicament. Now we are shocked to learn that its board of directors has decided to place the company under voluntary administration.
Air Mauritius is strategically and economically important for Mauritius. Other airlines come and go depending on how much profit they can make or not make by serving the destination. The case of Air Mauritius is different. Other than being a company in its own right, Air Mauritius is the most dependable link we have to the rest of the world. Mauritius is out of the mainstream of global axes of movement of people and goods, and this is where a national airline operating with the finest competitive edge is both crucial and relevant to position us internationally.
After having held the Mauritian flag high for many years, somewhere down the road, things suddenly took a turn for the worse. The arguments put up to explain this state of affairs: international market conditions were not as supportive as they had been, or the rising cost of fuel. These things happen, no doubt, given fluctuating business cycles and fuel costs, which represent one of the most important expenses for airline industries. But what about the human resource?
Successive managements utterly failed to uphold the airline as they should have. Insiders and trade unionists connected with the airline say it had been turned into a playfield for power games in which management became some sort of a pawn in the hands of different political establishments. The finances of the company ceased to be brilliant despite a persistent increase in passenger and goods traffic. Tellingly, Air Mauritius had been losing out even before the financial crisis of 2008. In fact, the catastrophic fuel hedging decision in the first year of the crisis spun the airline into huge losses. It confirmed that, apart from suffering for kowtowing to vested interests, there was a deep, persistent flaw in management itself. If a succession of ‘brilliant CEO’s’, all putatively industry professionals, were not able to make Air Mauritius a viable company, can we expect that insolvency practitioners to do that?
This directly raises suspicions that there is more to the decision to place MK under voluntary administration than meets the eye. Are there private interests making a takeover bid, or is there a predator airline waiting around with blessings from some quarters to pounce on a prey being offered on a platter? It would be a monumental shame to sell the jewel in the crown through a disguised privatisation in the name of Covid-19 and its impact on the national economy.
Will its majority shareholder, the Government of Mauritius, do what it takes to save Air Mauritius, or will the current dispensation preside over the destruction of one institution that had been held out as one of the jewels of the Republic of Mauritius? The choice is entirely its own. People who are knowledgeable about the travel and airline business are of the view that things will rebound once the Covid-19 pandemic is contained; that view is also shared by major consultancy firms like McKinsey and specialists in this sector. Air Mauritius can still make it the less there is outside interference in its management and autonomous running. If such interference were to stop and the professional management given a freer hand and the company’s board composition decided solely on the basis of strategic aviation and business expertise, Air Mauritius can revert back to the erstwhile status of a respected national airline.
This is not a matter for the government only to decide, never mind that it has the political mandate. It is a national issue and the opposition must be taken on board to share ideas on how not to let go of a company that is vital to our tourist industry and economy.
* Published in print edition on 24 April 2020
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