Air Mauritius’ Rs31.3Bn Debts Raise Concerns

Air Mauritius’ latest financial report for the fiscal year 2021/22 has sparked worries due to its significant long-term debts of Rs 31.3 billion and short-term debts of Rs 9 billion.

Despite reporting a profit of Rs 1.5 billion for 2021/22, these debt figures are causing concern, according to economist Takesh Luckho.

He pointed out that the airline’s previous financial struggles, including staff reductions and restructuring, combined with the current high debt levels, indicate the need for substantial funding in the coming years to manage these debts.

Additionally, the economist highlights that while the tourism sector is thriving, “there’s a limit to how much the company can generate”.

Air Mauritius has procured new aircraft since the period covered by this report, which further adds to financial pressures.

Luckho also underscored that the company’s “Cost of sales” exceeds its revenue, leading to a negative “Gross Profit” of Rs 4.3 billion.

While other income sources managed to push the airline to a profit, repaying such extensive debts will necessitate considerable revenue and financing.

Air Mauritius’ assets, valued at Rs 32.9 billion, slightly surpass its long-term debts. While this might not raise immediate concerns, Luckho believes the company’s reliance on its parent company and the government as guarantors might not be a sustainable strategy in the long run.

Source: Defi Media