Mauritius government is set to reimburse 9.5 billion rupees ($223.5 million) to creditors of the state-owned airline and provide an additional 2.5 billion rupees to help the carrier emerge from voluntary administration.
The Air Mauritius Ltd. debt-restructuring plan is in a report by administrators Sattar Hajee Abdoula and Arvindsingh K. Gokhool ahead of meetings with three classes of creditors scheduled for Sept. 28. Aircraft lessors will be called to vote for a 65% cut on their claims, while hedge counterparties will be asked to take a 40% reduction.
In the report dated Sept. 21, the administrators urge creditors to accept the proposed arrangement. If all approvals are secured, the airline will come out of deed administration on Nov. 1, the administrators said.
“It offers greater certainty and speed of return than the other options,” the administrators said. The payouts “will be funded by a shareholder loan through a government-owned entity and will be distributed to creditors by Oct. 31.”
Getting Air Mauritius back on track as soon as possible will have a positive impact for the tourism-dependent Indian Ocean island economy. The country is set to reopen borders to vaccinated tourists holding a negative PCR test on arrival as from Oct. 1.
Air Mauritius has been under voluntary administration since April 2020. In the 15 years through fiscal year ended March 2019, the airline incurred losses in seven years.
In addition to volatility in the airline industry, the administrators highlighted high labor costs, erosion of revenue productivity due to increasing competition and poor revenue management, uncompetitive offering in many markets and inefficiency due to multiplicity of aircraft types used.
The fleet has been cut to nine from 15, comprising of four Airbus A350-900, two A330-200neo and three ATR 72.
