Saturday, July 13, 2024

Covid-19 forces Air Mauritius into administration


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[divider style=”normal” top=”20″ bottom=”20″][dropcap]A[/dropcap]ir Mauritius becames the latest victim of Covid-19 with the company’s board of directors announcing on Wednesday that the carrier would be put into voluntary administration. 

Air Mauritius expects not to be able to meet its financial obligations “in the foreseeable future”. The board hopes that going into administration will safeguard the interest of the company and that of all its stakeholders. Two administrators have already been appointed in terms of the Insolvency Act of Mauritius.

The primary aim of administration is to try and salvage a company’s business, but if there are no reasonable prospects for this to succeed, an administrator may decide “to terminate or dispose of all or part of the company’s assets, in the interests of creditors, employees and shareholders.”

The struggling airline had already embarked on a transformation programme in January this year under which it was reviewing its business model in a bid to secure sustainability.

While “substantial progress” was made in developing its action plan, the closure of borders and halting of air services because of the coronavirus has led to a “complete erosion of the company’s revenue base,” said the company’s board of directors in a statement.

“There is uncertainty as to when international air traffic will resume and all indications tend to show that normal activities will not pick up until late 2020,” the airline says.

”In these circumstances, it is expected that the company will not be able to meet its financial obligations in the foreseeable future. The board therefore took the decision to put the company under voluntary administration in order to safeguard the interests of the company and that of  all its stakeholders.”

Trading in the company was suspended on Mauritius’ stock exchange and the company appointed administrators. Air Mauritius started flying in 1967 and served 22 destinations on four continents, according to the company’s website.

African airlines are facing their major financial crisis in the wake of the Covid-19 pandemic that has literary brought the world to a standstill.

Kenya Airways for example says it has converted some of its grounded passenger planes into cargo freighters as it seeks to remain in operation during the coronavirus pandemic.

Last Thursday, one of the Nairobi-based airline’s Dreamliners took off for London, UK, with over 40 tons of vegetables and other horticulture products for export. On the way back, it reportedly carried pharmaceuticals, mining equipment, packaging materials for flowers, and courier items.

Africa’s largest carrier Ethiopian Airline is also struggling to survive as intimated by chief executive Tewolde Gebremariam.

“To be honest with you, I had never thought that it would reach this stage we are performing for survival,” Tewolde told AFP in an interview this week.

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