Air Mauritius Ltd

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Air Mauritius Ltd.

Air Mauritius Centre
5 President John Kennedy Street
Port Louis
Mauritius
Telephone: (230) 207-7070
Fax: (230) 208-8331
Web site: http://www.airmauritius.com

Public Company
Incorporated: 1967
Employees: 2,500
Sales: EUR 360.44 million (2003)
Stock Exchanges: Mauritius
Ticker Symbol: AIRM
NAIC: 481111 Scheduled Passenger Air Transportation; 481112 Scheduled Freight Air Transportation; 481212 Nonscheduled Chartered Freight Air Transportation; 481211 Nonscheduled Chartered Passenger Air Transportation; 488190 Other Support Activities for Air Transportation; 721110 Hotels (Except Casino Hotels) and Motels

Air Mauritius Ltd. (AM) is the official airline of its namesake island, located to the east of Madagascar. AM has been called the Indian Ocean's leading airline. It flies to 30 destinations, as far as Europe, Asia, and Australia. According to Mark Twain, "God created Heaven based on Mauritius"; with only 1.5 million or so residents of its own, the country relies on upscale tourism, and attracts 650,000 visitors a year (60 percent from Europe).

Every year about one million passengers fly Air Mauritius, and the cargo operation carries 42,000 tons of freight (cargo operations accounted for one-fifth of revenues). The diverse fleet includes five Airbus A340 aircraft, two A319s, one ATR 72 turboprop, two ATR 42s, and three Bell Ranger helicopters. The Republic of Mauritius has a 51 percent controlling interest in the airline, which African Business dubbed "African Airline of the Year" in 2003.

Origins

Air Mauritius Ltd. (AM) was formed on June 14, 1967, as a ground handling agent for other airlines. Mauritius was then a colony of the United Kingdom; it became an independent state within the Commonwealth in March 1968. The island's economy was dependent upon sugar. The government owned 42.5 percent of the company when it was formed; other shareholders were shipping company Rogers & Co. (17.5 percent), British Airways and Air France (15 percent each), and Air-India (10 percent).

In 1972, AM began its own flight operations with a single, six-seat Piper Navajo leased from Air Madagascar. The first island-hopping flights were to neighboring Reunion and Rodrigues. The next year, AM launched a Mauritius-Nairobi-London flight with a Vickers Super VC 10 aircraft leased from British Airways. The airline took the phaeton rubicola or Paille-en-Queue, a fish-eating tropical bird, for its symbol. Communications minister Harry Tirvengadum joined the airline in 1972 and became managing director in 1978, a position he held for nearly two decades.

Nonstop Growth in the 1980s

In 1984, AM began operating nonstop service flying Boeing 747 jumbo jets to major European cities including London, Paris, and Rome. In April 1987, Air Mauritius began leasing two Boeing 747s for use on long routes, including one to Munich. It also ordered two Boeing 767 airliners worth $130 million.

As the network expanded to the east, AM began serving Singapore in 1985, using the stop as a regional hub. Three years later, the airline started flying to Kuala Lumpur in cooperation with Malaysian Airlines System (MAS).

Air Mauritius ordered five Airbus A340s, two of them leased, in 1993. The next year, the carrier began operating joint flights to neighboring territories with Air Madagascar and Air Austral of Reunion Island. The Air Austral link included connections to Nairobi.

Public in 1994

The airline offered 20 percent of its shares on the Stock Exchange of Mauritius in November 1994. British Airways, which competed with Air Mauritius on an Indian Ocean route, owned about 13 percent of the company. At the time, Air Mauritius had a 60 percent share of the local air travel market.

Revenues of FRF 1.5 billion in the 1995–96 fiscal year produced a profit of FRF 200 million (MUR 610 million). The airline connected 25 destinations at the time. In 1995, AM moved its headquarters to the 18-story Air Mauritius Centre in downtown Port Louis.

In February 1997, Nash Mallam Hassam, an 18-year veteran of British Aerospace, succeeded Tirvengadum, who had left to lead Air Afrique. He would remain AM's head for another four years.

It was a difficult time to take the reins, reported Airline Business. Profits and cash reserves were down drastically, thanks to skyrocketing fuel costs, aircraft lease prices that doubled, and unfavorable exchange rates. In addition, one of the company's A340 aircraft had caught fire on the ground in October 1996 and was out of service for ten months.

In July 1997, AM joined several other carriers (Air Comores, Air France, Air Madagascar, and Air Seychelles) in establishing a regional feeder airline called Air Ocean Indien (AOI). Coordination difficulties between the founding airlines, however, prevented AOI from taking off.

AM was developing Singapore as a hub for the Asian region, although the carrier did not yet fly there nonstop. Plans for expanding in the region were arrested by the Asian financial crisis.

Maintaining an Edge in the Late 1990s

In 1998, the French Direction Générale de l'Aviation Civile certified Air Mauritius as a JAR (Joint Aviation Requirements) 145 Maintenance Organization, a valuable endorsement. Within a few years, the company would be setting up a third party maintenance operation. Air Mauritius had been in talks with Irish airline Aer Lingus in the early 1990s about setting up a maintenance center in Africa. Most of the region's 220 airliners were flown to Europe for upkeep.

Mauritius was growing in importance as a destination for business travelers from India, and Air-India owned an 8.82 percent equity stake in AM's holding company, and 2.56 percent in the airline itself. In 1999, the airline contracted Cambridge Technology Partners of India to develop its e-business strategy.

AM got a new managing director, Vijay Poonoosamy, in October 2000, but he resigned six months later, returning to his former post as AM's legal director. Sir Harry Tirvengadum (he had been knighted in 1987) remained CEO throughout. Vinod Chidambaram replaced Poonoosamy; he had held this role during Nash Mallam Hasham's administration. Unfavorable exchange rates and rising fuel costs pushed AM into a MUR 214.4 million loss for the 2000–01 fiscal year.

Following the ouster of Poonoosamy, who was the brother of a high-ranking official in the Mouvement Militant Mauricien (MMM) party, allegations of embezzlement surfaced regarding the previous administrations' dealings with Rogers & Co., its general sales agent for certain destinations. The resulting scandal in turn forced the resignation of Harry Tirvengadum; he was replaced as chairman by Arjoon Suddhoo, an aeronautical engineer by training with experience at Rolls-Royce plc and the Massachusetts Institute of Technology. Vinod Chidambaram was the company's managing director. Nash Mallam Hasham, managing director from 1997 to 2000, was convicted of embezzlement. He died of a heart attack in November 2001.

Restructuring in 2002

AM launched a major corporate restructuring program in March 2002. The airline also moved its Asian hub from Singapore to Malaysia during the year, attracted by modern facilities and breaks on fees at Kuala Lumpur International Airport (KLIA). The airline added a second weekly flight to KLIA and opened a new office in Kuala Lumpur.

AM launched a scheduled cargo service to Johannesburg, South Africa, in October 2002. A McDonnell Douglas DC-8 was leased from African International Airways for the purpose, reported Air Transport Intelligence. Cargo accounted for 20 percent of revenues.

Service to India was expanded in the spring of 2003 with a new weekly flight to the country's "Silicon Valley," Bangalore. AM lured Indian tourists to Mauritius with the offer of a free visit to the island's new water park.

The airline's thriving business in Asia was deeply affected by the SARS epidemic in the spring of 2003. AM suspended flights to Hong Kong, Kuala Lumpur, and Singapore. The war in Iraq had a smaller impact on AM's traffic.

In May 2003, AM canceled services to the neighboring Seychelles Islands, where the government there prevented airlines from withdrawing profits from local banks. Other international airlines also were withdrawing from that market.

Yet another new managing director arrived at AM in September 2003. Megh Pillay had formerly led Mauritius Telecom. In late December 2003, AM launched a new turboprop service between Reunion and Rodrigues Island, a newly autonomous country that was eager to develop its tourist trade.

Company Perspectives:

Air Mauritius maintains its commitment to high quality service because the Mauritian carrier acts as an ambassador for the country and reveals the image of its people. Those who fly Air Mauritius realise that multiple elements in its offices and on board celebrate "L'Esprit de l'Ile Maurice," the Soul of Mauritius. This concept tries to express the blend of an innate sense of human encounter with the urge to improve constantly.

About 850,000 passengers flew Air Mauritius in 2002–03, and the cargo operation carried 42,000 tons of freight. The diverse fleet included five Airbus A340 aircraft, two A319s, one ATR 72 turboprop, two ATR 42s, and three Bell Ranger helicopters. Passenger count exceeded one million for the first time in 2003–04.

Principal Subsidiaries

Mauritius Estate Development Corporation Ltd. (MEDCOR) (93.7%); Pointe Coton Resort Hotel Company Ltd. (54.2%); The Mauritius Shopping Paradise Company Ltd. (41.7%).