Air Mauritius reports interim financial statements as at 31-Mar-2011

Global Aviation Industry

The year 2010/11 has been complex and challenging, with on one hand a partially improved economic environment, and on the other hand a number of exceptional events negatively affecting the industry. At the start of the financial year, airline operations were affected by the five day closure of European air space following the Icelandic volcano eruption. In December, severe snow storms in Europe caused major disruptions and thereafter there were natural disasters in Japan as well as unrest in the Middle East and North Africa. Moreover, the sustained increase in oil prices continued to slash the projected industry profits.

Air Mauritius posts Profits for the Financial Year ended 31 March 2011

Despite the above challenges and setbacks, the Group and the Company have managed to post reasonable profits for the year ended 31 March 2011. The Group and the Company recorded a profit for the year ended 31 March 2011 of Euro 10.3 million and Euro 9.3 million respectively compared to a loss of Euro 6.0 million and Euro 6.9 million for the previous year.

During the year, the Company continued to implement measures to stimulate revenue, modulate capacity to demand and improve efficiencies. The Company increased the number of passengers carried to 1,295,235 (+14.3%) as compared to 1,133,342 passengers for the previous year. Seat capacity was increased by 14.3 % from the previous year. The passenger load factor went down slightly from 80.6% to 79.8% whilst the average passenger yield including fuel surcharge went up by 3.9%. Cargo traffic also recorded significant growth with a total of 31,895 tons (+16.0%) being carried compared to 27,491 tons the previous year. Accordingly, the operating revenue of the Company increased by Euro 63.9 million (+17.3%) when compared to the previous year.

Operating expenses excluding the fuel hedge losses increased by Euro 79.3 million (+ 25.3%) mainly on account of a higher level of operations, a 24% increase in the price of fuel and a 6.4% depreciation of Euro against the USD. The above increase included an amount of Euro 49.8 million due to the increase in fuel costs. Out of this increase in fuel cost, the amount attributable to fuel price increase and Euro depreciation was Euro 35.5 million. Operating expenses including fuel hedge losses increased by Euro 50.7 million which took into account the reduction in net fuel hedge losses from Euro 33.7 million to Euro 5.1 million.

Shareholders' Funds

Total Shareholder's Funds for the Company increased from Euro 105.2 million as at 31 March 2010 to Euro 119.0 million as at 31 March 2011. The resulting net assets per share as at 31 March 2011 was Euro 1.16 (Rs 47.43) as compared to Euro 1.03 (Rs 42.56) as at 31 March 2010.

Outlook

For the year 2011, the International Air Transport Association (IATA) has substantially revised its initial profit forecast for the industry downward by more than 50% on account of rising fuel prices and a drop in passenger demand.

Despite the improvement in profitability, the Company will continue to face the challenges of rising prices of jet fuel, fall in demand, pressure on yields and accrued competition. The Company therefore remains cautious for the coming year.