Air Mauritius administrators are running out of time to save the airline as recurrent expenses pile up, costs of servicing leases for new aircraft accumulate and unions fail to give constructive proposals on job cuts.
Cumulative losses for the three fiscal years through March 2021 could reach 9.5 billion rupees (US$237M) if costs are not cut in the short term. At the current rate, the airline will require a cash injection of 10.3 billion rupees to meet its financial commitments, according to a document seen by Bloomberg.
“Constructive and reasonable propositions from the unions with regard to collective agreements will allow us to save as many jobs as possible and to mitigate the social impact of the restructuring,” Sattar Hajee Abdoula, one of the two administrators, said in a separate statement emailed by the Stock Exchange of Mauritius. “We need to bear in mind that the more we delay, the options that we have right now will shrink.”
Under voluntary administration since April 22 and suspended from the bourse, MK is facing the biggest challenge in its half-a-century history with the financial strain compounded by the Covid-19 pandemic.
Monthly expenses are about 350 million rupees for wages and 250 million rupees for leases, Hajee Abdoula told Radio Plus on Monday. Basic salaries for June will be paid and as many as 50% of the 3,000 employees could lose their jobs, Hajee Abdoula told the Port Louis-based broadcaster.
The company known as MK is using old Airbus A340 planes for humanitarian flights because it risks newer jets being seized by creditors for unpaid leases, according to the emailed statement.
Administrators asked employees with more than 33 years of service to opt for retirement from the end of July, according to the document.
“Some employees will face a situation of redundancy; all remaining employees will be asked to make sacrifices as an alternative to redundancy,” according to the document.
Source: Bloomberg
