MK: What will emerge?

Editorial

The long-awaited meetings governing our national carrier Air Mauritius (MK) fate have finally taken place on Tuesday 28th September and the appointed Voluntary Administrators have successfully negotiated their proposed Deed of Company Arrangement (DOCA) with major categories of creditors. In return for the latter’s acceptance of hair-cut losses, government is forking out some Rs 10 billion from public funds within one month plus an injection of some Rs 2.5 billion towards working capital of the new conglomerate structure called Airport Holdings Ltd. The latter will include MK, the airport ground and terminal handling (AML & ATOL) and the Mauritius Duty-free Paradise (MDFP). The conglomerate CEO and Chairman have already been identified by government as Ken Arian, special advisor at the PMO and Dev Manraj, a long-time career administrator in the Ministry of Finance with several successive governments.

The watershed outcome was unfortunately unavoidable when a carrier that was already under financial duress in the pre-covid year, mostly due to ill-advised fleet expansion, was sent into a mega nose-dive during a pandemic that struck hard at all business and leisure international travel affecting most national and international carriers. The fleet has been trimmed of excessive older generation planes although at fire-sale prices and operating expenses have been slashed. Sadly, in that process, the hundreds of hands that kept their smiles and the national pride afloat, some for decades, seem to have been hardest hit by the uncertainties, furloughs and outright dismissals over the past eighteen months. Clearly it would not have overburdened government costs to offer supernumerary staff more dignified exit conditions.

There have been controversies regarding the lengthy period for the administrators to come up with their proposal, the treatment of the human dimension, their extortionate level of personal and professional fees of Grant Thornton (up to Rs 168m from MK and therefore public purse), the lack of analysis of conditions leading to the financial duress of MK and the new conglomerate structure under which MK will begin its new course. While these and other aspects will fuel much comment, most observers would like to know:

(a) what lessons have been drawn from the past? Political interference in what should have been sound management-cum-highly technical decisions have been a feature of MK history. Flight destinations, corridors, fleet expansion, personnel recruitment and promotion, Board and CEO selection, amongst other factors have weighed heavily in the past. Will MK’s future be written with the same pen and ink?

(b) what are the Business Plans and fall-back scenarios with the left-over resized MK fleet (4 Airbus wide-bodied long-haul A350s and 3 ATRs for regional flights)? We have to assume these have been provided to Government although not disclosed either at the watershed meetings or to the general public. Many valuable suggestions have been spelt out by well-versed or experienced professionals, including former MK CEOs and former Finance minister Rama Sithanen and we trust the authorities will not be averse to holding some consultations with all such knowledgeable Mauritians while fine-tuning the restart Business Plans of MK under the aegis of Airport Holdings Ltd.

(c) what does the future hold under this new mega structure of Airport Holdings Ltd and its stewardship? There may be some reasons to add the captive and profitable subsidiaries to the Holdings conglomerate but by the same token are we risking adding another administrative and management layer above MK that could certainly have devastating effects? We can only wonder whether any international high-calibre aviation industry specialist or any past MK CEO would accept a decision and reporting structure that seems designed to make them little more than simple executants of commercial, recruitment and fleet policy decisions taken elsewhere in higher abodes.

While the issue is not being personalized, we beg to believe that neither MK nor government have time, latitude or luxury for on-the-job training of a super CEO nor can the population be asked to wait years for results.

Learning from the MK’s shock upheaval and the consequential burden on the taxpayer, every chance has to be put on our side for a safe relaunch of the MK brand by experienced industry professionals, particularly with the troubled visibility ahead in the travel and airlines industries.


* Published in print edition on 1 October 2021

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