Covid-19 affects African airlines: Now Air Mauritius joins insolvency league
The latest in news is Air Mauritius as the company’s board of directors announced that the carrier would be put into voluntary administration.
April 23, 2020: As the Covid-19 continues, global airlines are coming to a halt. The latest in news is Air Mauritius as the company’s board of directors announced that the carrier would be put into voluntary administration. The airline which completed 50 years in 2017, hosted the African Airlines Association's (AFRAA) 8th Aviation Stakeholder's Convention and 51st AFRAA annual general assembly (AGA) & summit in 2019.
On April 21, Virgin Australia filed for bankruptcy and appointed administrator to find an investor amid coronavirus crisis.
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.
“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 said.
”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.”
The company has suspended trading on Mauritius’ stock exchange and appointed administrators. Air Mauritius started flying in 1967 and served 22 destinations on four continents.
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. Since the outbreak of coronavirus in China, African Airlines have lost $400 million (312 million), according to the International Air Transport Association (IATA).
With South African Airways (SAA) and SA Express already in business rescue, and Comair busy restructuring, it raises the question as to how long airlines in Africa would be able to sustain. On April 18, SAA announced to lay off its entire 4,700 employees, compelling to ground the 86-year-old national carrier.
Meanwhile, Kenya Airways has converted some of its grounded passenger planes into cargo freighters as it seeks to remain in operation during the coronavirus pandemic. It took its Dreamliner to London, UK, with over 40 tonnes 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.
On the other hand, Ethiopian Airlines is facing revenue losses of 508 million euros from January to April and might need to secure outside financial help if the crisis lasts for another three more months, CEO Tewolde Gebremariam told AFP news agency.
