Air Mauritius Calls Mayday; Modi Govt Urges Strategic Rescue by Indian Airlines

Narendra Modi-led government has asked Indian airlines to consider a strategic investment in financially troubled African carrier Air Mauritius. The development came after the Ministry of External Affairs received a request from the Navin Ramgoolam-led Mauritian government to invest in the African carrier, which has a negative equity of $237 million, the Economic Times reported. 

Apart from this, the Mauritian government has urged the Indian carriers to increase the number of flights to its capital, Port Louis. 

“To cut losses, Air Mauritius has restructured its network, as part of which it significantly cut flights to India. Indian carriers have been asked to launch more flights to cover the shortfall. The airline is also seeking to raise funding by selling equity, so Indian airlines are being requested to consider that, (but) only if it suits their business interest,” ET reported, citing an official source.

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Earlier this week, Tata Group’s airline Air India and Air Mauritius announced the expansion of their codeshare agreement to enhance connectivity for India with South Africa, Reunion, and Madagascar via Mauritius. 

If an Indian carrier accepts the Mauritian government’s request, the development won’t be a unique one since prior to Air India’s homecoming in 2022, the Indian airline giant held nearly 8% stake in Air Mauritius. 

What’s Wrong with Air Mauritius 

Air Mauritius is controlled by Mauritian government-led Airport Holdings (AHL), and has a 99% stake in it. Air Mauritius board chairman Kishore Beegoo, who assumed the role in January this year, had reportedly highlighted that a decade of mismanagement is responsible for the air carrier’s financial woes.  

He flagged the decision to retain an Rs 8 billion loan from AHL as debt for two years instead of converting it to equity earlier, which severely impacted its credit standing. The debt worth Rs 1,500 crore was converted into equity in February this year as part of the carrier’s financial restructuring.

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The financial challenges gradually resulted in operational issues, including selling off aircraft only to lease back older and less efficient Airbus A330s. The air carrier had also over-ordered Airbus aircraft, adding long-term liabilities to the already financially strained airline.