At a time when the world was confident it had embarked on a path of
sustainable economic recovery, the recent events and market signals,
have cast serious doubt on this optimistic view. The fragile global
recovery has been tested by a number of crises since the start of 2011:
• Political upheavals in a number of Middle East and North African
countries impacting oil prices.
• The debt crisis in Europe and its impact on the EURO as well as
on the purchasing power of Europeans.
• The American debt crisis and its snowball effects on the global
economy.

The political, economic and social tensions, rampant uncertainty and
fear of a second cycle of recessions have significantly affected
customer confidence and led to a slowdown in consumer spending.

Tourism and air transport have been particularly hit.

Although Destination Mauritius has shown some resilience, tourism
professionals tend to agree that the 2011 low season is the worse that
the sector has ever experienced.

Air Mauritius, which depends to a large extent on tourism, is also
impacted. Furthermore, as all airlines, it has to make do with rocketing
fuel prices leading to increased costs of operations.

First quarter results reflecting these adverse conditions
The first quarter of the Financial Year (01 April to 30 June) is usually the
most challenging one for the airline as it falls in the low season.

In spite of the depressed global environment, Air Mauritius’ losses of
EUR 11.4 million for the quarter is a slight improvement on the EUR
11.6 posted the previous year. On the downside, these results
challenge the sustainable recovery process of the company since last
year’s turnaround.

With the number of passengers carried reaching 272 359, the company
hits a new record high for a financial year’s first quarter. Load factor
losing 1.4 points to reach 74.1% remains satisfactory in the light of the
record capacity deployed for the period. Air Mauritius offered 394, 364
seats representing a growth of 5.6% over the corresponding period last
year. Turnover also hit a record high of EUR 92.9 million. Yield
increased by 7.7% partially offsetting the drastic increase of 42% in fuel
price. The increase of EUR 10.1 million in fuel costs was also partially
compensated by a favourable EUR/USD exchange rate for the quarter.

Freight uplifted stood at 8000 tonnes. However, the lower yield
recorded indicates difficult times ahead as freight volume is a direct
function of the global economic health.

Outlook for the rest of the financial year
When the world entered a recession two years ago, some analysts
feared that it could end up in a double-dip cycle – some recent events
seem to be pointing to that direction. The recent events might, in fact,
suggest that we could be heading towards a second dip. The debt
crisis and the revision of US credit rating have blown winds of panic
over stock markets around the world. This situation is likely to affect
consumer confidence and their purchasing power. Air Mauritius and the
Mauritius tourist industry, are entering a new period of turbulence
where additional challenges must now be dealt with. A whole debate is
underway to find solutions.

All tourism trade partners however seem to agree on 3 points:
1. The challenges faced by the tourist industry are unprecedented
2. Aviation is an important component in the quest of sustainable
solutions
3. A strong national airline is essential
Air Mauritius has already sent a strong signal to all stakeholders by
embarking on a review of its business model.

The company must now manage the forthcoming months. Economic
crises’ impact on demand for air travel, skyrocketing fuel prices, volatile
exchange rates, excess capacity deployed by airlines contemplating a
sustainable industry recovery all highlight the need to be cautious for
the rest of the financial year – and laying the foundation for a ‘different
future’.