MK: A Continuing Debacle

Editorial

In an editorial comment we carried in this paper last year, we had echoed the sentiment felt by most stakeholders in the airline industry locally, including the small shareholders of Air Mauritius, that the appointment in December last of the Croatian national Kesimir Kucko as CEO of our national airline, a professional with more than 30 years of experience in international aviation, would hopefully help turn the company around after the colossal losses it registered for a number of years. The hope that things would change for the better has come crashing down with the announcement, last Friday, by the Board of Air Mauritius of the immediate suspension of Kesimir Kucko after less than one year in office as well as that of MK’s Chief Finance Officer, Jean Laval Ah-Chip – both for reasons of alleged ethical misconduct/managerial wrongdoings.

national airlines do sometimes fail for different reasons, and Air Mauritius has also been through several storms in the course of its existence. Open skies policy and the resulting competition forced it to take the cue not to take things for granted. But it was the quality of service for most of its existence which helped sustain the business. It overcame poor mismanagement decisions on occasion, such as when it landed into catastrophic hedging contracts for its fuel oil. It had to watch out for inexperienced political busybodies and/or their advisors dragging it to service various airports with little traffic or even change its Singapore hub to Kuala Lumpur at great costs with little benefits.

But things changed for the worse with a succession of scandals, financial or managerial, hitting the company and costing many of its past CEOs their jobs and in some cases their credibility. It came crashing down in the wake of the Covid pandemic, but the conditions for its failure had been set much earlier, through a host of ill-advised decisions, including the ill-timed purchase of brand new Airbus airliners the company could not afford and had to lease out at considerable losses. All this has been happening under different governments with their appointees on the board of Air Mauritius and in different management capacities – much like what obtains in other State Owned Enterprises.

The poor performance of these erstwhile profitable State enterprises might send the signal that public enterprises eventually are bound to fail, thereby demolishing the strategic political decision taken in earlier decades which sought to free them from bureaucratic shackles in a business environment or to break the hold of monopolies on the local economy through the setting up of state enterprises in certain strategic areas of activity. The state enterprise, it was thought at the time of their inception, would serve the ‘public interest’. 

It is deplorable that most of these institutions have been unable to live up to their mission – either due to political interference in their running, uploading of political agents in various capacities they are unfit for. As a result, there has been a clear failure on their part to fulfil their duty of protecting the national interest as it ought to have been done under the vigilance of wakeful Boards and their political masters. It may be worthwhile here to recall that some pf the prized SOEs (like MK or MT) have outside shareholders and often their business representatives on Board, which should have given their Boards on paper greater acumen, but it seems to little avail.

It has cost the public exchequer a budgetary layout of Rs 9 million in 2020 and, the following year a massive Rs 25 billion, injected by the Mauritius Investment Corporation (MIC) to save the company. This bonanza did not prevent the national carrier doing its business with the least of concerns for transparency in its operations and accountability for its decisions to the Mauritian taxpayers and population. For instance, some time back, MK’s 5 or more slots at the preferred Heathrow International Airport hub was ditched in favour for Gatwick, with two extra weekly slots. Was this decision, which may be irreversible in future years, researched at some depth would be anybody’s guess.

The hasty fire sale of 5-6 Airbus carriers from its fleet for some Rs 500 million (less than the cost of the engines!) in the wake of the ICU it found itself dragged into, has now forced MK to costly lease of older generation Airbuses to serve post-Covid rise in demand. Were there other more sensible alternatives the population wonders. It is worth noting that the reorganisation of the company’s various activities under Air Holdings Ltd, has edged out all other airlines as shareholders and delisted the Company. Given the level of public funds injected, we have to keep asking whether the hundreds of millions forked out to consultants and bedside doctors have been of value and whether decisions are being taken in the national interest.

Mauritius Times ePaper Friday 22 September 2023