2014/15. Annual Report

Transcription

1 Annual Report 2014/15

2 Mission, Vision & Values Strategic Role To be a profitable national airline Core Objectives Sustained profitability Support inbound tourism and home originating market Grow with smart investment Deliver exceptional service with Mauritian touch Create a culture that encourages innovation and efficiency and rewards creativity Mission Statement We are the National Airline of Mauritius proudly connecting our country to the world with exceptional Mauritian hospitality. Through innovative Employees determined to exceed the expectations of our Customers, we are committed to delivering sustained profitability in a socially responsible manner.

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4 Annual Report 2014/15 I 1 Table Of Contents 2 Key Results 4 Chairman s Message 6 Chief Executive Officer s Review 10 Glossary 12 Annual Report and Business Review 14 - The Board of Directors 20 - Corporate Governance 30 - Sustainability Report 33 - Enterprise Risk Management 41 - Remuneration Report 44 Management Discussion and Analysis 76 Certificate from the Company Secretary 76 Directors Disclosure Statement 77 Statement of Compliance 78 Directors Responsibility Statement 79 Independent Auditors Report 82 Financial Statements 82 - Statements of Financial Position 83 - Statements of Profit or Loss and other Comprehensive Income 84 - Statements of Changes in Equity 86 - Statements of Cash Flows 88 - Notes to the Financial Statements Translation of the Statements of Financial Position 146 Cascade Holding Structure 148 Directors in Subsidiary Companies 152 Shareholders' Information 155 Notice of Meeting 157 Proxy Form

5 2 I Key Results Group Financial Results 2014/ /14 Revenue Eur m Gross profit Eur m Net (loss) / profit Eur m (22.9) 8.5 Attributable (loss) / profit to equity holders of the parent Eur m (23.0) 8.3 Net assets Eur m (Loss) / earnings per share Eur (0.22) 0.08 Key Financial statistics 2014/ /14 Gross profit margin % Net margin % (4.9) 1.8 Return on equity % (58.2) 10.8 Return on net assets % (16.4) 4.6 Interest cover Times (10.5) 5.1 Interest and lease cover Times Gearing ratio 1.7:1 0.8:1 Group Operating statistics 2014/ /14 Passengers carried '000 1,370 1,330 Seats offered '000 1,948 1,913 Revenue passenger kilometres Million 6,186 6,046 Available seat kilometres Million 8,399 8,009 Revenue tonne kilometres Million Available tonne kilometres Million 1,256 1,201 Passenger load factor % Revenue per ASK (RASK) Eur cent Cost per ASK (CASK) Eur cent

6 Annual Report 2014/15 I 3 Chairman s Message

7 4 I Chairman s Message what it takes to change the fortunes of the company. A number of measures have already been taken to significantly improve our results in the short term while the Business Model will be reviewed later this year. The new Board of Directors was constituted on March 09, All the sub-committees of the Board have already been set up and have been meeting at an accelerated frequency to take stock of the situation and act promptly. The first priority was to reinforce governance standards with a Board that is autonomous and a Management fully empowered to take decisions that are urgently required. We will be recruiting a new CEO soon. This will be the first step towards consolidating a new team that will be tasked to build an Air Mauritius geared towards the future. We rely on the support of all our stakeholders to create a synergy which focuses on Destination Mauritius through a win-win strategy. Air Mauritius posted losses of EUR 22.9 million and EUR 23.7 million for the Group and the Company respectively as compared to profits of EUR 8.5 million and EUR 7.3 million for the previous year. The company has been on a bumpy ride since financial year 2007/2008 with several loss making years, while it made small profits in 2010/2011 and 2013/2014. It is clear that continuing on the current trajectory is simply not sustainable. The new Board of Directors has taken stock of the current situation and is determined to work with all stakeholders and Management and to do Dr. Arjoon Suddhoo Chairman

8 Annual Report 2014/15 I 5 Chairman s Message Chief Executive Officer s Review

9 6 I Chief Executive Officer s Review the order for new generation aircraft and stepped up service and products to achieve a 4-Star rated service, among others. The programme yielded positive results. The losses were reduced to EUR 3.6 million the following year and during financial year 2013/2014, helped by more favourable operating conditions Air Mauritius achieved a turnaround, posting profits of EUR 7.3 million. However margins remained fragile at 1.4% and the conditions during the past years were not conducive to addressing long standing structural issues. Air Mauritius Limited ended the financial year 2014/2015 with a loss of EUR 23.7 million. This is a setback given the remarkable path to recovery covered until financial year 2013/2014 when we achieved profits of EUR 7.3 million reversing from a loss of EUR 29.2 million posted in 2011/2012. The losses for the financial year under review was mainly due to a combination of external factors including the sharp drop of the euro, increasing competition and our operations on China that did not achieve forecasted growth targets, while operating costs increased. Record Operating Statistics However, Air Mauritius maintained its level of operations in spite of intensifying competitive pressure. We offered 1,947,766 seats (increase of 1.8% from 1,913,249) for the year under review and carried 1,370,423 (increase of 3% from 1,330,003) passengers which on both counts an all time record. Operating Revenue increased by 0.9% and also reached record levels at EUR 463 million. However Passenger Load Factor decreased from 75.5% to 73.7% on account of lower than expected passenger loads on the China routes. 2013/2014 A short lived turnaround The recovery, following losses made in financial year 2011/2012, was achieved with a series of measures, successfully completed in 7 identified focus areas (the 7-Step Plan) assisted by a favourable operating environment. We rebalanced the Network, set up an effective Revenue Management System, took measures to enhance the commercial function, flew less loss-making kilometres to save costs, firmed up Impact of the drop of the Euro The operating environment has been dominated by a sharp drop of the Euro which fell from 1.38 to the US Dollar on March 31, 2014 to 1.08 on March 31, With Europe remaining a leading market for Air Mauritius, much of the Company s revenue is still earned in Euros. The sharp depreciation of the Euro caused a net negative impact on bottom line of EUR 25.6 million as a result of the revaluation of assets, and liabilities at year end and costs incurred during the year. The positive impact of fuel cost management The price of crude oil dropped from an average of USD 108 a barrel to an average of USD 91 for the period under review. The current fuel cost management of the Company is based on policy that is administered by the Risk Management Steering Committee of the Board under which, Air Mauritius entered a number of hedge contracts. However more than 60% of the Company s consumption was not hedged. The Company thus partially benefited from the drop in the price of fuel. The net impact for the last financial year has been a reduction of fuel costs of EUR 10.5 million in spite of EUR 10.1 million in hedge pay-out. Intensifying competition Air Mauritius remains the leading airline operator serving the island with a record number of seats deployed across its network for the financial year under review. However competition intensified significantly during the year which inhibited growth. Load factor fell from 75.5% to 73.7%. Yield also dropped. The Mauritius market sales originating from Mauritius took the biggest hit with loss of market share leading to a net negative impact on revenues of EUR 6.8 million.

10 Annual Report 2014/15 I 7 Chief Executive Officer s Review Shortfall on the China market Since 2011, Air Mauritius embarked on an aggressive campaign to unlock the potential of China, the fastest growing global tourist market. Rebalancing growth to higher potential markets has been a key objective of our network re-engineering programme that has significantly contributed to compensating for the fall in traffic from Europe in recent years. We started off by operating a single frequency flight to Shanghai and in less than 4 years grew to 3 flights to Shanghai, 2 to Beijing while maintaining 3 weekly frequencies on Hong Kong. The China market has consistently recorded double digit growth since This year we are starting weekly operations to Chengdu. Our operations to China were supported by tour operators from China who committed to a number of seats. However last year, there have been unilateral defections from important tour operators, resulting in a shortfall in passenger numbers and a sharp drop in load factor from a budgeted 78.8% to 65.2%. China not meeting the set targets, resulted in a revenue shortfall of EUR 11 million that directly affected the bottom line. Outlook Challenges remain real as the competitive environment continues to deteriorate. The years to come will require Air Mauritius to take bold steps to boost revenue and manage costs while continuing to work on a Business Model that would enable the Company to better fulfil its mission. Work has already started with the Company intensifying its efforts to capture more customers. For instance, Air Mauritius Holidays will be launched in July this year. It will offer customers the possibility to build dynamic holiday packages and we are confident that Air Mauritius Holidays will grow into an important sales channel. Furthermore, in order to transform the Company, we need to rally support and uphold our efforts to address radical structural problems holding back the organization. Air Mauritius has to put up with an ageing fleet which is not only adversely impacting on cost of operations but also constitutes a disadvantaged product. The Company has significant investment needs to strengthen its capital base. Employee expectations need to be managed within the bounds of what the Company can afford, taking into account realities of the local labour market. Measures should be taken to optimize workforce productivity, both in terms of performance, skill levels, head count and performance related rewards system. The scale of the organization is also of essence and the Company should step up its efforts to look for synergies in terms of network, schedule, processes and the more efficient use of Company resources. The airline environment remains highly volatile and challenging. Exogenous factors like the price of fuel, exchange rates and market conditions will continue to affect the business. This highlights the need to build resilience and business agility. I stay confident for the future as I believe that the fundamentals of the business remain good. We are a solid airline with a wealth of talents, competencies and knowhow. We are the leading airline serving Mauritius in spite of an open sky and last year Skytrax upgraded the rating of our products and services to 4-Star. Furthermore the order for new generation aircraft has been firmed up. All of this make us better equipped to face competition and go into the future with more confidence. As I conclude my tenure as CEO I am pleased to be leaving a company that has a future. I wish Air Mauritius well, and seize this opportunity to thank all employees, the management of Air Mauritius, the Board, the Government, all our business partners, our shareholders and our customers for their support and trust. Goodbye and Thank you Standing together Andries Nathaniel Viljoen Chief Executive Officer 18 June 2015

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12 Annual Report 2014/15 I 9 Glossary

13 10 I Glossary Turnover Represents total revenue earned and loss derived, net of taxes, allowances and returns, from aircraft, helicopter, hotel, property rental, technical and traffic handling operations. Travelled Revenue Consists of gross revenue derived from the carriage of passengers, freight, mail and excess luggage. Profit after Tax Profit attributable to the equity holders. Gross profit margin Gross profit expressed as a percentage of turnover. Net margin Profit after tax expressed as a percentage of turnover. Earnings per share Profit after tax and non-controlling interest divided by number of shares issued. Net worth per share Shareholders interests divided by number of shares issued. Return on Owner s Equity Profit after tax divided by shareholders interest. Interest Cover Profit before interest charges divided by interest payable. Interest and lease Cover Profit before interest and lease charges divided by interest and lease payable. Dividend Cover Profit after tax divided by proposed/paid dividend for the year. Return on Net Assets Profit after tax divided by total assets less current liabilities. Available seat-km (ASK) The product of seats offered and the distance flown (in kms). Revenue passenger-km (RPK) The number of passengers carried multiplied by the distance flown (in kms). Passenger load factor RPK expressed as a percentage of ASK. Available tonne-km (ATK) The product of capacity offered (in tonnes) and the distance flown (in kms). Revenue tonne-km (RTK) Multiplying revenue load carried (in tonnes) by the distance flown (in kms). Overall load factor RTK expressed as a percentage of ATK. Cargo tonne-km (CTK) Multiplying cargo tonnage carried by the distance flown. Revenue per ASK (RASK) Total operating revenue divided by ASK. Cost per ASK (CASK) Total operating costs divided by ASK. Unit costs Airline operating costs (excluding sales commissions and pool settlements) divided by system-wide available tonne kilometres. Cash Cash at bank, cash in hand and short-term deposits. EBITDA Earnings before Interest, Taxes, Depreciation and Amortisation. Gearing Ratio Total debt to equity. Block Hours The time from which the aircraft departs from the gate to the time it arrives at the gate of its destination. Winter season Period between end of October to end of March. Summer season Period between end of March to end of October. Semdex An index of all listed share prices on the Stock Exchange of Mauritius. It indicates the movement of share prices from one trading session to another.

14 Annual Report 2014/15 I 11 Annual Report and Business Review

15 12 I Annual Report and Business Review The Directors have the pleasure in presenting the Annual Report, Business Review and Financial Statements of Air Mauritius Limited (the Company ) and its subsidiaries (the Group ) for the year ended March 31, The Financial Statements are set out on pages 82 to 144. Results for the year The Group reported a loss of Euro 22.9 million for the year ended March 31, 2015 compared to a profit of Euro 8.5 million in the previous year. The Company posted a loss of Euro 23.7 million for the year compared to a profit of Euro 7.3 million for the previous year. The results for the year under review have been significantly impacted by the depreciation of the Euro. The EUR/USD parity moved from 1.38 at the start of the financial year to 1.08 at 31 March When compared to the previous year ended 31 March 2014, the net negative impact of the depreciation of the Euro has been Eur 25.6M. During the year, the Company increased its weekly frequency to mainland China to 5 (Shanghai:3 /Beijing:2) as compared to only 3 direct weekly frequencies during the previous year. However, these operations have not yielded the expected outcome resulting in a significant drop in the passenger load factor from 77.4% to only 65.2% when compared to the previous year. In addition, the Company also suffered from a significant drop in market share on the local market as a result of intense competition. Local market passenger revenue decreased by Eur 6.8 million compared to last year. Overview of the Business Principal activities Air Mauritius Limited The main activities of the Group are the operation of international and domestic scheduled air services for the carriage of passengers, freight and mail and the provision of ancillary services for aviation. The domestic network comprises solely of operations to Rodrigues using turbo prop ATR72 aircraft. The Company is the leading scheduled international passenger airline in the Indian Ocean region. The Group s Head Office is in Port Louis, while its principal place of operations is SSR International airport, Mauritius. From this base, it serves 20 destinations touching four continents i.e Africa, Asia, Australia and Europe. The airline has a comparatively high proportion of point to point business with interline accounting to about 32.2% of its passenger sales revenues. The Company has interline outward billings with other carriers amount to around 5.2% of the airline passenger flown revenues The Group also operates a worldwide air cargo business, solely in conjunction with its scheduled passenger services, using the belly hold capacity for cargo transshipment. The Cargo business accounts for approximately 10% of total airline revenues. Economic value is generated by the Group by meeting the demand for business and leisure travel, with leisure travel being the main passenger segment. The Company provides vital links for trade and investment, and feeds the tourism sector and the rest of the economy through its substantial leisure travel opportunities for individuals and families. In the financial year ended 31 March 2015, the Group earned Euro million in revenue as compared to Euro million for the previous year. 86.4% of this revenue was generated from passenger traffic, 10.2% from cargo and 3.4% from other activities. During the period under review, the number of passengers uplifted was 1,370,423 and 35,528 tonnes of cargo were uplifted across the network. At the end of March 2015, the Group had 12 fixed wing aircraft and 2 helicopters in operation. Mauritius Estate Development Corporation Limited ( MEDCOR ). The subsidiary Company Mauritius Estate Development Corporation Limited (MEDCOR) is engaged in leasing out office and commercial space. Air Mauritius Limited holds 93.7% of the issued share capital of the Company. MEDCOR recorded a profit after tax of Rs 31.2 million (Euro 0.8 million) as compared to Rs 40.4 million (Euro 1.0 million) for last year. Last year s result included a fair value gain on investment property of Rs 0.5 million as compared to a fair value gain of Rs 16 million for 2014/2015. The office space stood at 99% occupancy level during the year. Pointe Coton Resort Hotel Company Limited Pointe Coton Resort Hotel Company Limited is in the business of providing hotel accommodations together with all related services in Rodrigues. Air Mauritius Limited holds 54.2% of its issued share capital. The Company recorded a profit of Rs 0.7 million (Euro 17,000) compared to a profit of Rs 4.9 million (Euro 0.1 million) for 2013/2014. The occupancy rate of the hotel was up from 59% to 67%.

16 Annual Report 2014/15 I 13 Annual Report and Business Review Airmate Ltd Airmate Ltd is a wholly owned subsidiary of Air Mauritius Limited and provides Call Centre and human resources to its holding company. Airmate Ltd recorded a turnover of Rs million (Euro 4.5 million) and a profit of Rs 1 million (Euro 25,000) as compared to a turnover of Rs million (Euro 3.5 million) and a profit of Rs 864,000 (Euro 21,162) for last year. Air Mauritius (S.A) (Pty) Limited In South Africa, the Group operates through a 100% owned subsidiary, Air Mauritius (S.A) (Pty) Limited which acts as agent for Air Mauritius Limited. It operates on a cost re-imbursement basis with its expenses being directly accounted for in books of the parent Company. Objectives The Group aims to build a sustainable business with margins covering its cost of capital on a long term basis. It is working in partnership with all its key stakeholders to foster growth and harness business opportunities and also to effectively manage the risks associated with the business. Shareholders return For its shareholders, the Group s key responsibility is to generate a sustainable return on the capital employed in its business and to ensure it can invest for future growth. It seeks to return to shareholders a balance between capital growth and an income stream by way of dividend. The Group seeks to operate complementary businesses in its investments with the core being airline operations. Other stakeholders The Group also takes account of its responsibilities to other stakeholders including its employees, its customers and the communities affected by its operations, as well as having regard to the impact its business has on the environment. Group policies are benchmarked with best practice internationally in managing these stakeholder relationships.

17 14 I Annual Report and Business Review The Board of Directors The names and details of the directors who served during the period ended March 31, 2015 are set out below. All directors served throughout the financial year with the exception of Appalsamy Thomas, GOSK who resigned from the Board on 31 December 2014, Kremchand Beegoo who resigned on 12 December 2014, Dheerendra Kumar Dabee, GOSK who resigned on 31 March 2015, Gerard Espitalier-Noel who resigned on 16 December 2014, Ramapatee Gujadhur, CSK who resigned on 11 December 2014, Raj Ringadoo who resigned on 15 December 2014, Suresh Seeballuck, GOSK who resigned on 31 December 2014, Aisha Timol, GOSK who resigned on 30 March 2015, Arjoon Suddhoo who was appointed on 09 March 2015, Ramprakash Maunthrooa who was appointed on 05 February 2015, Kan Oye Fong Weng-Poorun who was appointed on 05 February 2015, Dev Manraj, GOSK who was appointed on 09 March 2015, Sateeaved Seebaluck, GOSK who was appointed on 09 March 2015 and Banoomatee Veerasamy who was appointed on 09 March The names and details of the directors, who were appointed as Board members after 31 March 2015 are also set out below. Marc Hein, GOSK, Daniel Mackay and Bissoon Mungroo, GOSK were appointed on 10 April Dr SUDDHOO Arjoon - Chairman The Air Mauritius Board of Directors appointed Dr Arjoon Suddhoo as Board Director and elected him Chairman of the Board on 09 March After winning the national Laureateship in 1978, Dr A Suddhoo started his higher education in England. He completed his Aeronautical Engineering course with First Class Honours at the University of Manchester and pursued his PhD in Aeronautics at the same University. He is also holder of an MBA with Distinction from the University of Liverpool. After his post-doctoral research at Manchester University, he was employed in 1986, as Research Scientist for Rolls-Royce Aerospace in UK. During his 8 years in the Company, he was promoted to Principal Scientist and Research Manager, contributing significantly to the Company Research and Development while working closely with responsibility for Company in-house and external Research and Development. During the same years, Dr Suddhoo worked in close collaboration with Cambridge and Oxford Universities and MIT. In 1993, Dr Suddhoo returned to Mauritius to be employed as Head of Research and Planning by the Tertiary Education Commission and subsequently, in 1998, he assumed the post of Executive Director of the Mauritius Research Council, where he is currently. Dr Suddhoo has been the Chairman of Air Mauritius for the period 2001 to 2005 and is currently the President of the Aeronautical Society of Mauritius. He is a Fellow of the Royal Aeronautical Society, Fellow and Board Member of the Mauritius Institute of Directors and Fellow (Secretary) of the Mauritius Academy of Sciences. He was also appointed Visiting Professor, Chair in Innovation, Queens University, Ireland. RIVALLAND Louis Mr Louis Rivalland is currently the Group Chief Executive of Swan General Ltd and Swan Life Ltd. He was previously part of the management team of Commercial Union in South Africa and conducted several assignments for Commercial Union in Europe. He then worked as Actuary and Consultant for Watson Wyatt Worldwide. He is a former President of the Joint Economic Council and of the Insurers Association of Mauritius. He has played an active role in the development of risk management, investments, insurance and pensions in Mauritius having chaired or been part of various technical committees in these fields. He holds a BSc (Hons) in Actuarial Science and Statistics, and is a Fellow of the Institute of Actuaries, UK. He was appointed to the Board on 26 July 2012.

18 Annual Report 2014/15 I 15 Annual Report and Business Review The Board of Directors (Cont d) VILJOEN Andries Nathaniel - Chief Executive Officer Mr Andries Nathaniel Viljoen is the Chief Executive Officer. He was appointed to the board on 21 July He joined the Company in April 2009 as the Chief Financial Officer and Chief Information Officer. Apart from his degrees in the commercial and financial fields, he is also a Chartered Accountant (SA). Mr Viljoen is a seasoned airline executive with more than 32 years airline leadership experience. His experience includes the 15 years he spent with Comair/British Airways as Finance and Commercial Director and the 8 years he spent at South African Airways initially as Chief Financial Officer and then as President and Chief Executive Officer. NANDAN Rohit Mr Rohit Nandan took charge of Air India Ltd as Chairman & Managing Director on 12 August He was appointed to the Board on 12 August He was earlier Joint Secretary, Ministry of Civil Aviation, Delhi and belongs to Service Cadre of IAS/Uttar Pradesh/1982 batch. Prior to Civil Aviation Ministry, he was holding the post of Principal Secretary, Rural Development Department, Government of Uttar Pradesh. RACHOU Etienne Mr Etienne Rachou was appointed to the Board on 07 November After graduating from the HEC Business School, he began his career in 1979 with the Air France Group. In 1987, he was appointed Vice President Sales, Air France for the Paris region. He became Air France Regional Manager for United Kingdom and Ireland in April 1996 before becoming Air France Senior Vice President, Europe & North Africa, on 30 June Mr E Rachou was promoted Air France Senior Vice President, Africa & Middle East, on 1 July 2007 and he was made Senior Vice President Africa & Middle East, Air France KLM on 1 September He was appointed Deputy Executive Vice President International & The Netherlands, Air France KLM on 1 January 2010, and became a member of the Air France Executive Committee. As from July 2013, Mr E Rachou became Head of the Alliances Air France and Project Manager Alliances, Air France / KLM Group. ESPITALIER-NOËL Philippe Mr Philippe Espitalier-Noël was appointed to the Board on 9 October He is currently the Chief Executive for Rogers & Company Limited, one of the largest listed conglomerates in Mauritius. He holds a BSc in Agricultural Economics from the University of Natal in South Africa and an MBA from the London Business School. He worked for CSC Index in London as Management Consultant between 1994 and MAUNTHROOA Ramprakash Mr Ramprakash Maunthrooa is currently Senior Adviser at the Prime Minister s Office. He is also the representative of the Prime Minister s Office on the Board of Investment. Mr Ramprakash Maunthrooa has served as the Managing Director of the Board of Investment. He has also been the Director General of the Mauritius Ports Authority and subsequently served as Chairman of the organization from 2000 to He has also worked as a freelance Consultant as a port specialist and subsequently as an Investment and Management Consultant both in Mauritius and the region.

19 16 I Annual Report and Business Review The Board of Directors (Cont d) WOO SHING HAI Francois, GOSK Mr François Woo Shing Hai, GOSK was appointed to the Board of Air Mauritius Limited on 14 August, 2009 and is currently the Group Managing Director of Compagnie Mauricienne de Textile Ltée, industry leader in fashionwear manufacture. He received the prestigious award Entrepreneur of the Year Mr Woo was appointed by the Chairman of the World Bank and the Managing Director of the International Monetary Fund as adviser to the President of the Republic of Senegal. In year 2006, he was conferred the academic title of Honorary Fellowship in Management by the University of Mauritius. MANRAJ Dev, GOSK Mr Dev Manraj, GOSK holds a Post-graduate Diploma in International Management from the International Institute for Management Development (IMD) from Switzerland and is a Fellow of the Association of Chartered Certified Accountants (FCCA). Mr Manraj has an extensive portfolio of experience, developed from the start of his career, predominantly within the public and semi-governmental spheres in Mauritius. Between 1974 and 1998, he occupied various positions within the Ministry of Finance, ranging from Senior Accountant at the outset to Financial Secretary in He has been involved in the drafting of Budget Speeches, formulation of Capital and Recurrent budgets and fiscal policies. In 2000, Mr Manraj also served as Advisor to the Prime Minister and as Senior Advisor in Mr Manraj has also served as Chairman of the State Bank of Mauritius (SBM), the State Insurance Cooperation of Mauritius Ltd (SICOM), the Mauritius Offshore Business Activities Authority (MOBAA), Airports of Mauritius Co. Ltd and Business Parks of Mauritius Ltd (BPML). He has been actively involved in most of the major projects in Mauritius, including the Ebene Cybercity. He contributed in the setting up of the Financial Services Commission, the Mauritius Leasing Company Ltd, the National Transport Corporation and the State Investment Corporation amongst others. In addition, Mr Manraj was previously appointed Director of the Board of Investment (BOI), the Mauritius Sugar Authority and the Mauritius Broadcasting Corporation at different intervals in his career. SEEBALUCK Sateeaved, GOSK Mr Sateeaved Seebaluck, GOSK is presently the Secretary to the Cabinet and Head of the Civil Service. Mr Seebaluck attended the Royal College Port Louis before proceeding to Delhi University for higher studies where he obtained the degree of BA (Hons) Economics. He is also holder of a Diploma in Public Administration and Management from the University of Mauritius. He joined the Civil Service in January 1976 as Economist at the Ministry of Economic Planning and Development and shortly after joined the Administrative Cadre at the Ministry of Finance. He was promoted to the position of Principal Assistant Secretary in 1990 and in 2000 he was appointed Permanent Secretary. He served various Ministries and has been Chairman and Director of many Boards and Statutory Committees during his career. While serving at the Ministry of Environment, Mr. Seebaluck pioneered Sustainable Development and organized the International Conference on Small Islands Developing States in He attended several environmental summits and conferences and was the main negotiator for Mauritius of various Multilateral Environmental Agreements. He is recipient of several International Awards on the environment. In 2010, he was promoted Senior Chief Executive and was posted to the Ministry of Civil Service and Administrative Reforms. He has been awarded Grand Officer of the Order of the Star and Key of the Indian Ocean (GOSK) by the President of the Republic on 12 March 2015 for contribution in the public service and for the protection of the environment.

20 Annual Report 2014/15 I 17 Annual Report and Business Review The Board of Directors (Cont d) FONG WENG - POORUN Kan Oye Mrs Kan Oye Fong Weng Poorun is presently Senior Chief Executive of the Ministry of Tourism and External Communications. She holds a Bachelor of Arts (Hons) in Administration. She has a long career in the public service and has acquired vast experience in public administration and management in different ministries such as Ministry of Works ( ), Ministry of Health ( ), Ministry of Energy, Water Resources and Postal Services ( ), Ministry of Public Infrastructure and Public Safety ( ), Ministry of Agriculture, Fisheries and Natural Resources ( ) and Ministry of Housing & Lands ( ), the Prime Minister s Office (Home Affairs) ( ) where she was appointed Senior Chief Executive in March In January 2015 she joined the Ministry of Tourism and External Communications. She was conferred Chevalier dans l Ordre national de la Légion d Honneur in July 2011 by the President of the Republic of France and in 2014 she was honoured Citoyenneté d Honneur in Rodrigues and also received the Exemplary Women Leadership Award at the Africa India Partnership Summit VEERASAMY Banoomatee Mrs Banoomatee Veerasamy is Acting Managing Director of The State Investment Corporation Ltd (SIC), the Investment Arm of Government. She has 30 years experience as Director on a number of Boards where Government holds a stake. She has a strong background in strategic investment, having managed the SIC s portfolio of wholly- and partly-owned Government businesses. She is the Executive Director of Prime Partners Ltd, a fully-owned subsidiary of the SIC, serving as Corporate Secretary to subsidiaries/associates of SIC and other companies. A qualified stockbroker, Mrs Veerasamy has managed Prime Securities Ltd and has assisted in the inception of the Stock Exchange of Mauritius (SEM), of which she was also a member. A Fellow of the ICSA, Mrs Veerasamy also holds a Masters degree in law from the University of London. HEIN Marc, GOSK Mr Marc Hein, GOSK founder and Head of Practice of Juristconsult Chambers was born and raised in Mauritius and is a graduate of Gray s Inn School of Law in London. Mr Hein started practicing law in 1980 at the Chambers of Sir Raymond Hein, Q.C. joining then a practice dating since Mr Hein was elected to the Mauritius Parliament in 1983 and was a member of Parliament until Marc Hein was also Chairman of the Mauritius Bar Council in He established Juristconsult in 1992 which has been thriving since, as a leading business law firm. Marc Hein is currently the Editor of the Mauritius Business Law Review and represents local and international clients on numerous cross border transactions. Marc Hein was appointed as the first Enforcer of Global Finance Mauritius (GFM). He was also the Chairperson of the National Economic and Social Council of Mauritius. From early 2012 to June 2014, Marc Hein was Chairperson of the board of the Financial Services Commission. In 2013, Marc Hein has been awarded the title Grand Officer of the Order of the Star and Key of the Indian Ocean (GOSK) for his contribution to the legal and financial sectors.

21 18 I Annual Report and Business Review The Board of Directors (Cont d) MACKAY Daniel Mr Daniel Mackay has worked for 33 years at Air France SA where he has had various functions, including being a member of the Audit Committee and Strategic Committee. Mr Mackay has solid experience in Corporate Governance, Board of Directors and its Committees, good knowledge in human resources and in social skills related to the activities of global air transport. MUNGROO Bissoon, GOSK Mr Mungroo, GOSK is the President of the Association of Hotels de Charme de l ile Maurice, President of the Rashitriya Sanatan Dharma Mandir Sangathan and the Chairman and Managing Director of Manisa Hotel (Mauritius) and Le Flamboyant Hotel. He is the Managing Director of Mungroo & Sons Ltd (Transport), Gitanjali Co ltd (Transport), the Director of Alteo Milling Company and the Managing Director of Office Clean and DHR Training. NOORAULLY Fooad - Company Secretary Mr Fooad Nooraully is the Executive Vice President-Legal, Corporate Communications & Company Secretary. He was formerly the Company Secretary & General Counsel. He joined the Company in April Barrister-at-law by profession, he is in charge of the Legal Department, Corporate Communications and Company Secretariat. A former State Counsel and Lecturer in law at the University of Mauritius, he holds a Masters in Commercial Law from the University of Birmingham. Resignation of the Directors The following Directors have resigned during the financial year: THOMAS Appalsamy, GOSK - Chairman (resigned on 31 December 2014) Mr Appalsamy Thomas, GOSK is currently Group Head of Human Resources, Marketing and Communications of Harel Mallac. He started his career with Air Mauritius Limited and spent thirteen years with the national carrier, occupying several positions including that of Executive Adviser to the Chairman and Managing Director. In 1986, he joined British American Tobacco (Mauritius) as Human Resources Manager before embarking on an international career for nearly 5 years with the same Company. In 2001, he joined consultancy firm DCDM in Mauritius as a free-lance consultant and, in 2004, became its CEO for the Central, Eastern and Southern Africa Region. He was formerly the Chairman of Mauritius Telecom. He was appointed to the Board on 30 August GUJADHUR Ramapatee, CSK (resigned on 11 December 2014) Mr Ramapatee Gujadhur, CSK was appointed to the Board on 30 September He was Senior Manager at the Mauritius Commercial Bank (MCB) and retired at the end of 2003, he was a member of the MCB Top Management team since 1988.

22 Annual Report 2014/15 I 19 Annual Report and Business Review Resignation of the Directors (Cont d) BEEGOO Kremchand (resigned on 12 December 2014) Mr Kremchand Beegoo was appointed to the Board on 30 September He was formerly the Executive Director - Cargo at Air Mauritius Limited. He is presently the Managing Director of Cargotech Ltd, a major Freight Forwarding Company and Freightech Ltd, a Consulting Company involved in the Audit, Strategic Enhancement & Optimisation of Logistics, Distribution & Supply Chain Management of global companies. RINGADOO Raj (resigned on 15 December 2014) Mr Raj Ringadoo was appointed to the board on 8 March He was the Chairman of The State Investment Corporation Ltd, the investment arm of the Government of Mauritius. He was the Chief Manager at the Development Bank of Mauritius until his retirement in April ESPITALIER-NoëL Gerard, CSK, CONM (resigned on 16 December 2014) Mr Gerard Espitalier-Noël CSK, CONM was appointed to the Board on 12 August He holds a diploma de Perfectionnement en Administration des Entreprises from IAE (Institut d Administration des Entreprises) from Université d Aix-Marseille. He had a long career as the Head of Air Mauritius in Europe and also held the position of Hotels & Leisure Director of Indigo Hotels & Resorts Ltd in Mauritius between January 2008 and December SEEBALLUCK Suresh, GOSK (resigned on 31 December 2014) Mr Suresh Seeballuck, GOSK was appointed to the Board on 29 September He is currently the Secretary to the Cabinet and Head of the Civil Service. He was formerly the Secretary to Home Affairs. TIMOL Aisha, GOSK (resigned on 30 March 2015) Mrs Aisha Timol, GOSK was appointed to the Board on 01 September 2008 and is a former Chairperson of the Audit Committee. She is presently the Chief Executive of the Mauritius Bankers Association after a career in the public sector culminating in her appointment as Deputy Director of the Budget Bureau and Director of Financial Services at the Ministry of Finance. She was also a Senior Lecturer at the University of Mauritius in Mathematical Economics and Econometrics. Mrs Timol serves on a number of boards and Committees in both public and private sectors and is a Fellow of the Mauritius Institute of Directors. DABEE Dheerendra Kumar, GOSK, SC (resigned on 31 March 2015) Mr Dheerendra Kumar Dabee, GOSK, SC, a Laureate and Law & Political Science Graduate from Birmingham University, Barrister at Law of Middle Temple since 1981, and a Senior Counsel is currently Solicitor-General in the Attorney General s Office and the Chairman of the Medical Tribunal, the MCIA s Control and Arbitration Committee, and a member of the Commonwealth Secretariat-Arbitral Tribunal. He is legal adviser to a number of public organisations. He has participated in, and been also head of delegation at, many Bilateral Air Services Negotiations and also has extensive experience in labour law and industrial relations as well as in contract negotiation. He was appointed to the Board on 22 June 1998.

23 20 I Annual Report and Business Review Corporate Governance Corporate governance involves balancing the interests of the stakeholders in a Company - these include its shareholders, management, customers, suppliers, financiers, government and the community at large. The Board is accountable to the Company s shareholders for good governance and is committed to ensure that the interests of all stakeholders are given due consideration. In line with the Report on Corporate Governance for Mauritius issued by the National Committee on Corporate Governance under the Financial Reporting Act 2004 (the Code ), the Board of Directors has put in place various Committees to assist in the execution of its responsibilities and to ensure compliance with the provisions set out in the Code. Board of Directors The Board is led by the non-executive Chairman, Dr Arjoon Suddhoo, while the executive management of the Company is led by the Chief Executive Officer, Mr Andries Nathaniel Viljoen. The roles of the Chairman and the Chief Executive Officer are separate and recognised in terms of the Report on Corporate Governance for Mauritius. Role of the Board The role of the Board is threefold namely, to establish policies, to make significant and strategic decisions and to oversee the organisation s activities. The Board sets the Company s strategic targets, ensures that the necessary financial and human resources are in place for the Company to meet its objectives and reviews management performance. The Board also sets the Company s values and standards and ensures that its obligations to the stakeholders are understood and met. Board Meetings The Board of the Company met thirteen times during the year under review. The Board has defined specific terms of reference for its Committees. A statement of the directors responsibilities in respect of the financial statements is set out on page 78 and a statement on going concern is given on page 28. Board Information All directors receive regular information about the Company s affairs to enable them discharge their duties at Board meetings. Independent professional advice is available to directors in appropriate circumstances,the cost of which is fully borne by the Company. Board and Director Appraisal It is the Company s policy to review and evaluate the performance of the Board and its directors annually. However, during the year under review, no evaluation of the Board has been carried out and no individual assessment of Board directors undertaken since the Board composition has been reviewed as from January The evaluation exercise will be undertaken in financial year 2015/2016. Roles and functions of Chairman and Chief Executive Officer The Chairman s primary function is to preside over meetings of directors and to ensure the smooth running of the Board and to preside the Company s meetings of Shareholders. The function and role the Chief Executive Officer is separate from that of the Chairman. His main functions are, inter-alia, to develop and recommend to the Board a long term vision and strategy for the Company, to devise business plans and budgets that support the Company s longterm strategy, to strive to consistently achieve the Company s financial and operating objectives and to ensure that the day-to-day business affairs of the Company are appropriately managed and monitored. Role of Non-Executive and Independent Non-Executive Directors There were 12 directors serving on the Board of Air Mauritius as at March 31, 2015 and 3 other directors were subsequently appointed after year end. Only the Chief Executive Officer is an executive director. Nonexecutive and independent directors play a vital role in providing independent judgement in all circumstances. The non-executive directors are drawn from a diversity of business and other backgrounds, so as to bring a broad range of views and experiences to Board deliberations. Although the Board is presently composed of only one executive director as opposed two as prescribed/recommended by the Code, it is of the view that the spirit of the Code is being respected in view of the attendance and participation of Senior Executives at all Board meetings and deliberations on matters such as strategy and investment. The Board acknowledges that the current practice is for the controlling shareholder to propose members of the Board for election by shareholders at the Annual General Meeting of the Company. Three of these are independent directors as defined by the Code. In line with the Code, all directors stand for re-election on a yearly basis. Nominations to the various Committees are also made on a yearly basis.

24 Annual Report 2014/15 I 21 Annual Report and Business Review Corporate Governance (Cont d) Senior Executives of the Company are invited regularly to attend Board meetings and sub-committee meetings. External consultants are also invited to attend Board and sub-committee meetings as and when their expertise is required. Dealings in Company Shares No director dealt in Company shares during the year. Directors are notified of close periods on a quarterly basis. Details of Directors shareholding in the Company are given on page 42 of this Annual Report. Directors Remuneration The Board members are remunerated having considered their knowledge, competencies and experience as well as the level of remuneration offered by other comparable companies listed on the local market. Board directors are paid monthly fees for their services to the Company. Directors, who are also directors within the Group, receive fees from these subsidiaries. Details of the Director s fees and other remuneration are contained on page 41 of the Annual Report. Significant Contracts No contracts of significance or loans existed between the Company and its Directors during the year under review, with the exception of the service contract of the Executive Director which is summarised on page 41. The Company has a well-established procedure for the disclosure of interests including a Register of Interests for both Board and Management. Role and Function of Company Secretary The Company Secretary plays a key role in advising the Board in the application of Corporate Governance in the Company. He also ensures that the Company complies with its constitution and all relevant statutory requirements, codes of conduct and rules established by the Board. The Company Secretary ensures that papers for Board and Committee Meetings are distributed prior to the relevant meeting. All Board members have access to the Company Secretary for any further information they may require in the discharge of their responsibilities. The Company Secretary is the focal point of contact for institutional and other shareholders. The appointment and removal of the Company Secretary is a matter for the Board as a whole.

25 22 I Annual Report and Business Review Corporate Governance (Cont d) Board Members and Board Meetings The following table shows the list of Board members and the number of Board and Committee meetings held during the year and the attendance of individual directors. Status Board CGC AC RMSC SORSC Chairman Mr Appalsamy Thomas, GOSK (up to 31 December 2014) N 7/7 n/a n/a 7/7 4/5 Dr Arjoon Suddhoo (as from 09 March 2015) N 3/3 n/a n/a n/a n/a Chief Executive Officer Mr Andries Nathaniel Viljoen E 13/13 0/1 n/a 7/7 5/5 Directors Mr Kremchand Beegoo (up to 12 December 2014) I 4/7 n/a 3/6 n/a 4/5 Mr Dheerendra Kumar Dabee, GOSK, SC. (up to 31 March 2015) N 10/13 1/1 n/a n/a 4/5 Mr Gerard Espitalier-Noël, CSK, CONM (up to 16 December 2014) N 7/7 1/1 n/a n/a 5/5 Mr Philippe Espitalier-Noël N 12/13 0/1 4/6 n/a n/a Mr Ramapatee Gujadhur, CSK (up to 11 December 2014) I 6/7 n/a 5/6 6/7 n/a Mr Raj Ringadoo (up to 15 December 2014) N 6/7 1/1 6/6 n/a n/a Mr Louis Rivalland N 12/13 n/a 4/6 7/7 n/a Mr Suresh Seeballuck, GOSK (up to 31 December 2014) N 4/7 1/1 n/a n/a 1/5 Mrs Aisha Timol, GOSK (up to 30 March 2015) N 12/13 1/1 n/a 6/7 n/a Mr Francois Woo Shing Hai, GOSK N 8/13 n/a 2/6 2/7 n/a Mr Rohit Nandan N 2/13 n/a n/a n/a n/a Mr Pankaj Srivastava (Alternate to Mr R Nandan) N 1/13 n/a n/a n/a n/a Mr Etienne Rachou N 4/13 n/a n/a n/a 1/5 Mr Ramprakash Maunthrooa (as from 05 February 2015) N 4/4 n/a n/a n/a n/a Mrs Kan Oye Fong Weng-Poorun (as from 05 February 2015) N 4/4 n/a n/a n/a n/a Mr Sateeaved Seebaluck, GOSK (as from 09 March 2015) N 2/2 n/a n/a n/a n/a Mrs Banoomatee Veerasamy (as from 09 March 2015) N 2/2 n/a n/a n/a n/a Mr Dev Manraj, GOSK (as from 09 March 2015) N 1/2 n/a n/a n/a n/a Mr Marc Hein, GOSK (as from 10 April 2015) I n/a n/a n/a n/a n/a Mr Daniel Mackay (as from 10 April 2015) I n/a n/a n/a n/a n/a Mr Bissoon Mungroo, GOSK (as from 10 April 2015) I n/a n/a n/a n/a n/a E = Executive Director I = Independent Director N = Non Executive Director n/a: Not a member Company Secretary: Fooad Nooraully Auditors: Ernst & Young and KPMG CGC Corporate Governance Committee AC Audit Committee RMSC Risk Management Steering Committee SORSC Senior Officers Remuneration and Selection Committee Attendance: Number of meetings attended / total eligible to attend

26 Annual Report 2014/15 I 23 Annual Report and Business Review Corporate Governance (Cont d) Directorship of the Group The table below shows the Board memberships across the Group. Name of Directors Air Mauritius Holding Ltd Air Mauritius Limited MEDCOR Ltd Pointe Coton Resort Hotel Co Limited Airmate Ltd Mauritius Helicopter Ltd Air Mauritius Holidays Limited Mr Appalsamy Thomas, GOSK (up to 31 December 2014) Chairman Chairman Chairman Chairman Chairman Chairman Chairman Dr Arjoon Suddhoo (as from 09 March 2015) Chairman Chairman Mr Andries Nathaniel Viljoen ü ü ü ü ü ü ü Mr Kremchand Beegoo (up to 12 December 2014) ü Mr Dheerendra Kumar Dabee, GOSK, SC (up to 31 March 2015) ü ü Mr Gerard Espitalier-Noël, CSK, CONM (up to 16 December 2014) ü ü Mr Philippe Espitalier-Noël ü ü Mr Ramapatee Gujadhur, CSK (up to 11 December 2014) ü ü Mr Raj Ringadoo (up to 15 December 2014) ü ü ü ü ü Mr Louis Rivalland ü ü Mr Suresh Seeballuck, GOSK (up to 31 December 2014) ü ü ü Mrs Aisha Timol, GOSK (up to 30 March 2015) ü ü Mr Francois Woo Shing Hai, GOSK ü ü Mr Rohit Nandan ü ü Mr Pankaj Srivastava (Alternate Director to Mr R Nandan) ü ü Mr Etienne Rachou ü ü Mr Ramprakash Maunthrooa (as from 05 February 2015) Mrs Kan Oye Fong Weng-Poorun (as from 05 February 2015) Mr Dev Manraj, GOSK (as from 09 March 2015) Mr Sateeaved Seebaluck, GOSK (as from 09 March 2015) ü ü ü ü ü ü ü ü Mrs Banoomatee Veerasamy (as from 09 March 2015) Mr Marc Hein, GOSK (as from 10 April 2015) Mr Daniel Mackay (as from 10 April 2015) Mr Bissoon Mungroo, GOSK (as from 10 April 2015) ü ü ü ü ü ü ü

27 24 I Annual Report and Business Review Corporate Governance (Cont d) Board Committees The Board has four specific sub Committees, which meet regularly under terms of reference set by the Board. Copies of these are also available on Specific responsibilities are assigned to sub-committees of the Board, namely, the Audit Committee, the Risk Management Steering Committee, the Corporate Governance Committee and the Senior Officers Remuneration and Selection Committee which act within the parameters of their clearly defined terms of reference. As and when necessary other Committees may be set up by the Board on an ad-hoc basis to deal with specific issues of relevance to the Company. For financial year 2015/2016, the Board has decided to set up a Finance Committee and review in depth the term of reference of SORSC. Each of the Committees has authority to take external advice as required. 1) AC Audit Committee 2) RMSC Risk Management Steering Committee 3) SORSC Senior Officers Remuneration and Selection Committee 4) CGC Corporate Governance Committee 1) Audit Committee (AC) Members: Raj Ringadoo (Chairperson) (up to 15 December 2014), Louis Rivalland (Chairperson) (as from 10 April 2015), Kremchand Beegoo (up to 12 December 2014), Ramapatee Gujadhur, CSK (up to 11 December 2014), Francois Woo Shing Hai, GOSK (up to 09 April 2015), Philippe Espitalier-Noël, Dev Manraj, GOSK (as from 10 April 2015), Daniel Mackay (as from 10 April 2015), Banoomatee Veerasamy (as from 10 April 2015), Kan Oye Fong Weng-Poorun (as from 10 April 2015) Secretary: Fooad Nooraully In attendance: Andries Viljoen (CEO), Vijay Seetul, Dindoyal Sookun, Nazir Shah Kodaruth, Ernst & Young and KPMG. All members of the Audit Committee are non-executive directors and included the two independent Directors of the Board until their resignation in December However, the non-executive Chairperson of the Audit Committee was not an independent director as prescribed by the Code but had the professional knowledge, expertise and experience in finance to head this Committee. The Board considers that each member brings broad experience and professional knowledge of financial reporting to the Committee s deliberations. The Committee s main responsibilities include: To oversee the financial reporting process to ensure the balance, transparency and integrity of published financial information; To review the effectiveness of the Company s internal financial control; To evaluate the independence and to review the effectiveness of the internal audit function; To ensure that no unjustified restrictions are made on the internal audit function; To review the effectiveness of the independent audit process including recommending the appointment and assessing the performance of the external auditor; To review the Company s process for monitoring compliance with laws and regulations affecting financial reporting, its Code of Business Practice and Ethics and its Fraud Prevention Policy; To review the appropriateness of the Group s accounting policies and considers changes to them; and To review the significant accounting judgments and monitor the integrity of the annual and interim financial statements. Ultimate responsibility for the approval of the annual and interim financial statements rests with the Board. In appropriate circumstances, the Committee may make recommendations to the Board to put to shareholders for approval at the annual meeting, in relation to the appointment, reappointment and removal of the Company s external auditors. The Committee reviews the work undertaken by the external auditors and assesses annually its independence and objectivity taking into account relevant professional and regulatory requirements and the relationship with the auditors as a whole. The Committee monitors the auditors compliance with relevant regulatory, ethical and professional standards. It also monitors the provision of any non-audit services as well as processes for the rotation of partners, in the audit process.

28 Annual Report 2014/15 I 25 Annual Report and Business Review Corporate Governance (Cont d) Items reviewed by the Audit Committee during the year include: a) Financial reporting: The Committee reviewed the draft annual and interim reports before recommending their publication to the Board. The Committee discussed with Management and external auditors the significant accounting policies, estimates and judgments applied in preparing these reports. b) Internal controls: The Committee has an ongoing process for reviewing the effectiveness of the system of internal controls. During the year it considered reports from the Vice President-Internal Audit summarising the work planned and undertaken. The Committee looked at recommendations for improvements as well as actions taken by management as a result. The Committee also sought the views of the external auditors in making its assessment of the effectiveness of controls. c) Internal audit: It is the responsibility of the Internal Audit Department to provide assurance to the board regarding the implementation, operation and effectiveness of internal control and risk. To ensure the independence of the Internal Audit, the Vice President Internal Audit reports directly to the Committee and the appointment and dismissal of the head of Internal Audit is under pursue of the Committee. The Committee evaluated the performance of internal audit from the quality of reports and recommendations from the Vice President-Internal Audit. d) Audit Fees: The Committee also recommended to the Board the fees to be paid to external auditors each year. Details of the fees paid to the external auditors during the financial year 2014/2015 can be found on page 42. 2) Risk Management Steering Committee (RMSC) Members: Appalsamy Thomas, GOSK (Chairman) (up to 31 December 2014), Arjoon Suddhoo (Chairman) (as from 10 April 2015), Andries Nathaniel Viljoen (CEO), Aisha Timol, GOSK (up to 30 March 2015), François Woo Shing Hai, GOSK (up to 09 April 2015), Louis Rivalland, Ramapatee Gujadhur, CSK (up to 11 December 2014), Dev Manraj, GOSK (as from 10 April 2015), Ramprakash Maunthrooa (as from 10 April 2015), Bissoon Mungroo, GOSK (as from 10 April 2015) Secretary: Fooad Nooraully. In Attendance: Vijay Seetul, Dindoyal Sookun & Jean Laval Ah Chip The Committee s terms of reference include: Ensuring there is a system of risk assessment across the Company on an on-going basis; Reviewing the effectiveness of the Company s risk management system including risk assessment reports; Assisting the Board to understand the total risks facing the Group and the Company; Approving risk mitigation actions for specific items of risk and identifying areas for system improvements and monitoring; Reviewing actions taken for specific critical transactions in accordance with the risk map for both financial and non-financial risks on a continuing basis; Setting and approving changes to financial approval limits for hedge and treasury transactions; and Setting and approving risk parameters for the Company s budget each year. Matters reviewed during the Year The Risk Management Steering Committee met seven times during the year to monitor enterprise wide risk, approve hedge transactions for both currency and fuel and to set parameters for the Company s hedging strategy for each period. In addition the RMSC also: Reviewed and approved risks limits and parameters, hedge mandate and any derogation from the risk manual as appropriate, whilst aligning to the business strategy and risk appetite. Reviewed and approved hedge performance for both jet fuel and currency and ensuring that these transactions remain within pre-approved risk framework. Ratified the key Enterprise-wide risk register as approved by the risk owners and the leadership team. Carried out an analysis of counterparty credit risks, reviewing and approving new counterparties that would otherwise deviate from prescribed internally set criteria. Reviewed and approved the budgeted financial parameters to be used as the basis for the financial year budget.

29 26 I Annual Report and Business Review Corporate Governance (Cont d) 3) Senior Officers Remuneration and Selection Committee (SORSC) Members: Appalsamy Thomas, GOSK (Chairman) (up to 31 December 2014), Arjoon Suddhoo (Chairman) (as from 10 April 2015), Andries Nathaniel Viljoen (CEO), Gerard Espitalier-Noël, CSK, CONM (up to 16 December 2014), Kremchand Beegoo (up to 12 December 2014), Suresh Seeballuck, GOSK (up to 31 December 2014), Dheerendra Kumar Dabee, GOSK, SC (up to 31 March 2015)), Etienne Rachou (up to 09 April 2015), Philippe Espitalier-Noël (as from 10 April 2015), Marc Hein (as from 10 April 2015), Ramprakash Maunthrooa (as from 10 April 2015), Sateeaved Seebaluck, GOSK (as from 10 April 2015). Secretary: Fooad Nooraully In Attendance: EVP HR The Committee is responsible for approving all the policies governing the compensation paid to the Company s executive officers and senior management. The Committee also assists the board in the recruitment, evaluation, selection and approval of contracts of candidates for senior management positions and ensuring levels of remuneration are appropriate. A new Staff Committee is being set up for the financial year 2015/2016. The aim is to ensure that the Company achieves a cohesive and structured approach to organisational alignment and optimal use of human resources. 4) Corporate Governance Committee (CGC) Members: Aisha Timol, GOSK (Chairperson) (up to 30 March 2015), Andries Nathaniel Viljoen (CEO), Dheerendra Kumar Dabee, GOSK, SC (up to 31 March 2015), Raj Ringadoo (up to 15 December 2014), Suresh Seeballuck, GOSK (up to 31 December 2014), Philippe Espitalier-Noël (up to 09 April 2015), Gerard Espitalier-Noël, CSK, CONM (up to 16 December 2014), Marc Hein (as from 10 April 2015), Daniel Mackay (as from 10 April 2015), Bissoon Mungroo, GOSK (as from 10 April 2015), Sateeaved Seebaluck, GOSK (as from 10 April 2015), Francois Woo Shing Hai, GOSK (as from 10 April 2015). The Chairman of the Committee will be nominated shortly. Secretary: Fooad Nooraully The role of the Corporate Governance Committee is to ensure that Board structures as well as reporting requirements on corporate governance, whether in the Annual Report or on an ongoing basis, are in accordance with the principles of good governance and the Code. This Committee was chaired by a non-executive and non-independent director whereas the Committee did not have a majority of independent non-executive directors. However she was formerly the chairperson of the Audit Committee and the Board believed that she had expertise, professional knowledge and was suited to head this Committee. As from April 2015, membership to the Committee has been reviewed. Three Independent/Non-Executive directors have been appointed to that Committee. Directorship In Other Listed Companies Name of Directors Mr Philippe Espitalier-Noël Mr Louis Rivalland Mr Dheerendra Kumar Dabee, GOSK, SC Directorship in other listed companies Ascencia Limited Rogers and Company Limited Espitalier Noël Limited Swan Insurance Company Limited The Anglo Mauritius Assurance Society Limited ENL Commercial Limited ENL Land Limited Ireland Blyth Limited New Mauritius Hotels Limited Swan General Ltd State Bank of Mauritius Limited

30 Annual Report 2014/15 I 27 Annual Report and Business Review Corporate Governance (Cont d) Leadership Team The leadership team of Air Mauritius comprises of the following senior executives: Andries Nathaniel Viljoen Is the Chief Executive Officer. He joined the Company in April 2009 as the Chief Financial Officer and Chief Information Officer. Apart from his degrees in the commercial and financial fields, he is also a Chartered Accountant (SA). Mr Viljoen is a seasoned airline executive with more than 32 years airline leadership experience before joining Air Mauritius. Indradev Buton Is the Executive Vice President-Information Systems, Procurement & Facilities since September He was formerly the Executive Vice President-Strategic Planning. He joined Air Mauritius in July Donald Payen Is the Executive Vice President-Customer Experience, Ground & In-flight Services since September He was formerly the Executive Vice President-Commercial & Communications. He joined the Company in June Vijay Seetul Is the Executive Vice President-Finance. He was formerly the Executive Vice President-Internal Audit. He joined the Company in April Fooad Nooraully Is the Executive Vice President-Legal, Corporate Communications & Company Secretary. He was formerly the Company Secretary & General Counsel. He joined the Company in April Ashok Keerodhur Is the Executive Vice President-Technical Services. He is in charge of the Technical Services Department which provides maintenance and engineering services for the airline fleet and technical handling services to third parties. He joined the Company in April Sudh Ramjutun Is the Executive Vice President-Strategic Planning, Network, Fleet, Alliances & Cargo. He joined the Company in May 1990 and he was the former Executive Vice President- Airports and Ground Operations. Captain Garth Gray Is the Executive Vice President-Flight Operations. He joined the Company in December He is an experienced professional pilot with a successful career in aviation of over 30 years, both in military and civil spheres. He was formerly seconded by the UK CAA as Flight Operations Advisor to the Civil Aviation. Derek Shanks Was the Executive Vice President-Commercial. He joined the Company in April He had a wide experience in developing International Markets for Airlines, Cruise Companies and Hotel Groups. Mr Shanks left the Company on 30 January Sarawon Puddoo Was the Executive Vice President-HR & Organisation Development. He joined the Company on 01 June 2012 and resigned on 31 July Vikash Bungsy Was the Executive Vice President-Human Resources from August 2014 up until he resigned on 31 March Dindoyal Sookun Is the Financial Controller responsible for financial reporting and financial control across the Group. He joined the Company in August He also oversees the Financial Accounting, Management Accounting and Revenue Accounting functions. Chitranjan Ramdaursingh Is the Vice president-sales. He joined the Company in December Previously, he held various positions in Finance and Internal Audit Departments before moving to Commercial Department. He is now overseeing the Commercial deparment. Nazir Shah Kodaruth Is the Vice President-Internal Audit since April He was formerly the Senior Manager-Procurement. He joined the Company in September Insurance cover & indemnities The Company has arranged appropriate insurance cover in respect of legal action against its directors and officers. The Company has granted rolling indemnities to the directors and the Secretary, uncapped in amount but subject to applicable law, in relation to certain losses and liabilities which they may incur in the course of acting as officers of Companies within the Group. These indemnities also set out the terms on which the Company may, in its discretion, advance defence costs. A specimen indemnity is available for view on the Company s website, by clicking on the heading Corporate Governance.

31 28 I Annual Report and Business Review Corporate Governance (Cont d) Code of Ethics and business conduct The Code of Ethics and Business Conduct introduced in 2004 forms the foundation for the conduct expected of every employee in the Company s business dealings. This document has been endorsed by the Board and applies to all employees of Air Mauritius worldwide whether already in employment or newly recruited. Whilst it is impossible to anticipate or provide for every situation that may arise, the Code is a brief statement of the standards of business conduct which should guide out everyday decisions. This Code sets out the standards and guiding principles of conduct of Air Mauritius personnel in the discharge of their duties and deals with principles of integrity, diligence and responsibility. It helps staff comply with their duties, adhere to the best standards and avoid breaches of discipline as a result of ignorance, misunderstanding or wrong interpretation of their obligations. Shareholder Agreement The Company is not a party to any shareholders agreement and, to the best of its knowledge, there is no such agreement between its direct shareholders. Holding structure The holding structure of the Company is set out on page 146 of the Annual Report. Substantial shareholders The following shareholders were directly or indirectly beneficially interested in 5% or more of Air Mauritius Limited share capital as at 31 March Shareholder Direct Indirect Effective % % % Air Mauritius Holding Limited Government of Mauritius State Investment Corporation Ltd Rogers and Company Ltd Compagnie Nationale Air France Air India Communication with Shareholders The Company maintains regular contact with its larger institutional shareholders through its meetings with the Chairman, the Chief Executive Officer and the Executive Vice President-Finance. In addition, annual stockbroker and investor events are held to inform the public on the performance of the Company. The Board also receives regular feedback on investors views. Copies of any news releases and presentations to investors are made available to the public through the Company s website, The Annual Meeting of each year gives a reasonable opportunity for the Board to discuss all matters relating to the Company and its performance with shareholders. At these meetings, issues related to Corporate Governance, Company operations and performance are raised by the shareholders and responded to by the Directors. In addition, the Chief Executive s address, at the Annual Meeting, responds to any issues raised by shareholders in writing, in advance of the meeting. Shareholders also express their views freely by voting for resolutions at the Annual Meeting. Donations As in previous years, the Group and Company did not make any donations to political parties. The Company continued to provide support in the form of rebated tickets and promotions to social organizations. No donation in cash was made by Air Mauritius Limited during the financial year under review. Going concern After making enquiries, the directors consider that the Company has adequate resources to continue operating for the foreseeable future. For this reason, the going concern basis has been adopted in preparing the accounts for the year 2014/2015 as disclosed in note 4.3 of the financial statements.

32 Annual Report 2014/15 I 29 Annual Report and Business Review Corporate Governance (Cont d) Receipts and Returns to Shareholders Dividend Policy The Company has a policy of paying 30% of profits each year as dividend, subject to the solvency test. In determining the level of dividend, consideration is given to the Company s future funding requirements. The directors have not recommended any dividend for the year ended 31 March 2015 in view of the financial results of the Company. Shares and Shareholders The authorised share capital of the Company is MUR 2,000,000,000 (EUR 81,566,000) divided into 200,000,000 ordinary shares of MUR 10 each. The number of ordinary shares issued and fully paid in Air Mauritius Limited as at 31 March 2015 was 102,305,000 shares (EUR 41,724,000) the same as in the previous financial year. In accordance with the Company s constitution, all ordinary shares have equal rights to dividends and capital and each share carries one voting right. Capital Structure Shareholder Rights Air Mauritius Holding Limited whose registered office is Air Mauritius Centre, President John Kennedy Street, Port Louis is the holding Company of Air Mauritius Limited. The ultimate controlling entity is the Government of Mauritius. At 31 March 2015, the shareholding of Air Mauritius Limited was as follows: Shareholding of Air Mauritius Limited as at 31 March 2015 Ordinary Shareholders Number of shares (of MUR each) % voting rights Air Mauritius Holding Ltd 52,175, % The Government of Mauritius 8,564, % The State Investment Corporation Ltd 4,646, % Rogers and Company Ltd 4,379, % Compagnie Nationale Air France 2,841, % Air India 2,617, % National Pensions Fund 2,078, % The Mauritius Commercial Bank Ltd 1,405, % Other Investors 23,595, % Total 102,305, The shareholder analysis at 31 March 2015 was as follows: Range of Shares No. of Shareholders No. of voting rights % of share capital % of all shareholders 1-1,000 10,591 3,877, ,001-5,000 1,149 2,589, ,001-10, ,671, ,001-25, ,450, ,001-50, ,105, , , ,859, ,001-1,000, ,041, Over 1,000, ,709, Total 12, ,305,

33 30 I Annual Report and Business Review Corporate Governance (Cont d) Receipts and Returns to Shareholders (Cont d) Major clauses in the Memorandum and Articles of Association of Air Mauritius Limited In order to protect the operating rights of the Company under the air services agreements, the number of ordinary shares held by non-mauritian nationals is monitored by the Directors. Presently, there are no large interests of single or associated non-mauritian nationals in the shareholding of the Company. Issue of Shares Subject to the provisions of the Companies Act 2001 (the Act ) and, without prejudice to any special rights previously conferred on the holders of any existing shares or class of shares, any share in the Company may be issued either at par or at a premium or (subject to Section 54 of the Act) at a discount or by way of bonus and may, in accordance with any applicable enactment or rule of law, issue shares of no par value, and any shares issued by the Company may be issued with such preferred, deferred, other special rights or restrictions, whether in regard to dividend, voting, return of capital, or otherwise, on such terms and conditions and at such times and in such manner as the Company may by ordinary resolution determine. Transfer of Shares Any member may transfer all or any of his shares by instrument in writing provided that in the case of any shares of the Company which are traded on the Stock Exchange of Mauritius the transfer may be in such form as is permitted by the Stock Exchange of Mauritius. Every instrument of transfer of shares shall be accompanied by a declaration signed on behalf of the transferee in a form determined by the Board stating whether or not the transferee is on registration a Mauritian national and whether any person other than a Mauritian national will hold or have interest in the shares referred to in the instrument of transfer. Directors The number of Directors shall not be less than nine (9) members or more than fifteen (15) members. Not less than two thirds of the Directors of the Company shall be Mauritian citizens. Appointment of Directors The Directors of the Company shall be appointed by the Company in Annual Meetings. Related Party Transactions Related Party Transactions are performed at arms length and these are disclosed in note 32 of the Financial Statements. Shareholders Information Information relating to share price, reporting dates, and meetings of shareholders are shown on pages 152 and 153. Sustainability Report As a national airline, the role of Air Mauritius is also to connect the country to societies, economies and markets around the world. Supporting around half of the airline connectivity of Mauritius, the Company therefore plays a major role in sustaining international trade and travel. Air transport is essential in linking Mauritius to the rest of the world. For financial year ended March 2015, the Company carried 1.4 million passengers and 35,500 tonnes of cargo. Moreover, as a responsible corporate citizen, Air Mauritius recognizes the need to reinforce strong ties not only with its stakeholders but also with the community at large. Looking beyond Corporate Social Responsibility, Air Mauritius commitment to sustainable development aims at creating Shared Value for the community as it furthers its business objectives. Since inception, the growth of the airline has been based on its core values and commitment to the role it is entitled to play as a national airline. Air Mauritius has therefore chosen to focus on the following areas: Creating shared value Since its creation in 1967, one year before the country s independence, Air Mauritius has become a driving force of the local economy. For nearly half a century now it has improved access to different markets thus creating shared value for industries, more particularly tourism, a pillar of the economy that contributes nearly 13% of the GDP. Travel and tourism also supports nearly 30% of Mauritian jobs. Qualification of Directors No Director shall be required to hold shares in the Company to qualify him for appointment.

34 Annual Report 2014/15 I 31 Annual Report and Business Review Sustainability Report (Cont d) As a national airline Air Mauritius is in a unique position to partner the country s tourist industry and share coordinated strategic objectives with its key stakeholders. Since the beginning of the global economic crisis, despite demand from Mauritius main market for tourism, Europe being impacted, Air Mauritius continued to stimulate those markets. The Company also rebalanced growth to destinations with higher potential, like Asia and Africa. It currently operates weekly flights to mainland China with one flight to Beijing, two flights to Shanghai in addition to its two flights to Hong Kong. In July 2015, Air Mauritius will extend its operations to Chengdu. Since Air Mauritius has been developing the Chinese market, the country has consistently recorded substantial growth in tourist arrivals and the goal of welcoming 62,000 Chinese tourists a year now looks realistic in the medium term. Developments of markets in Asia and Africa have also opened the door to new opportunities for trade and business. Air Mauritius additionally spares no effort in promoting the Mauritius Destination with special offers on several routes. It also supports trade partners to attend trade fairs overseas by offering them discounted tickets. Territorial continuity with Rodrigues Air Mauritius has participated in the development of Rodrigues for over 40 years by connecting the island to mainland Mauritius and the rest of the world. The special programme introduced in August 2009, to encourage Mauritians to visit the island has contributed immensely to the growth of the Rodrigues tourism. This program complements the active participation of Air Mauritius in the promotion of the Rodrigues destination. Residents of Rodrigues are also benefitting from special air fares while Air Mauritius provides assistance for medical emergencies and transportation of medical items to and from Mauritius. Air Mauritius policy to support sports, culture and environmental development also applies to Rodrigues. Amédée Maingard Foundation Through the Amédée Maingard Foundation, Air Mauritius supports high potential Mauritian students, usually first ranking students, in Tourism and Hospitality Management courses at the University of Mauritius, the University of Technology and the Hotel School of Mauritius. The foundation pays for their course fees and grants them a monthly stipend during the entire duration of their Degree or Diploma Programmes. Carbon Emission In 2012, the European Union launched an emissions trading scheme (EU ETS) that intended to apply a carbon emissions charge to airlines flying into and out of the Eurozone. Following international opposition, the EU reduced the coverage of the scheme to flights within the EU, and to allow time for the development of a global market-based approach by the International Civil Aviation Organisation (ICAO). In October 2013, the ICAO General Assembly agreed to develop a global market based measure by As a result of this progress at ICAO, the EU introduced a Regulation to continue with EU ETS but restricted to intra-europe flights until The General Assembly in October 2016 will review and decide about the future scope of EU ETS. In spite of the reduced scope, there have been a number of delinquent airlines that have not complied with the EU ETS. According to the German Emissions Trading Authority (DEHSt), fines totalling Euro 5,363,400 (USD 5.9m) have been levied on 44 operators. The directive requires member states to issue penalties amounting to Euro 100 for each tonne of CO2 emitted for which the aircraft operator has not surrendered allowances. The operator is still required to purchase and surrender the requisite number of allowances on top of the fine. Although it has not published a list, the French Competent Authority, DGAC, is understood to have recently started issuing non-compliant aircraft operators with fines. Under the DGAC, Air Mauritius has voluntarily complied with the EU ETS since 2012 and will continue to do so. Air Mauritius takes its environmental responsibilities seriously and intends to continue to improve its environmental efficiency and to minimise emissions. Health and safety status In its endeavor to continuously be a safe airline for travel in the eyes of its valued customers, Air Mauritius has demonstrated its commitment to achieve and maintain its Safety, Health & Environmental (SHE) standards as an integral part of its business plan. Promoting Safety, Health & Environment (SHE) has retained management s interest to ensure it really translates its duty of care towards its employees safety and well-being as well as protecting the community against environmental damage. During the financial year 2014/2015, the following Safety, Health & Environmental targets have been achieved:

35 32 I Annual Report and Business Review Sustainability Report (Cont d) Managing the Ebola Virus Disease (EVD) Threat Air Mauritius Limited Health & Safety Team had played an important role in collaboration with the Department of Civil Aviation and the Ministry of Health & Quality of Life to ensure that Air Mauritius could extensively contribute in preventing any risk of EVD spread in Mauritius. Several actions have been taken namely, the establishment of an Emergency Preparedness Plan to deal with any suspected case of EVD, release of internal EVD Fact Sheet and posting of the Contingency Plan for Communicable Diseases in the Share Point, Companywide sensitization on EVD mode of transmission and health protocols for any suspected case by the Health & Safety resource persons, uplift of Universal Precautions Kits in aircraft, supply of Personal Protective Equipment for handling aircraft in case of known suspected case of EVD and helping the Ministry of Health & Quality of Life to finetune their protocols during drills and simulations. Safety & Health Training With a view to promote health and safety knowledge sharing in order to make Air Mauritius workplace safer and healthier, several trainings have been delivered namely Basic Forklift Safety, First Aid at Work, Fire Fighting Techniques, OSH Induction for Contractors and New Recruits, Safe Use of LPG, Alcohol & Drug Testing Techniques, Bomb Alert Management, Noise at Work, Working Safely at Height, Manual Handling Techniques, Road Safety, Working Safely in Confined Space, Safe Work with Chemicals, Human Factors, Ramp Safety and Safety Management System. Dedicated Safety & Health training courses are also being run for Cabin Crew and Technical Services staff since November 2014 and will last until December Health Surveillance & Promotion Programme Air Mauritius cares for the wellness and fitness of its employees. In line with its health surveillance policy, cabin crew and pilots had undergone statutory medical examinations while a vaccination exercise had been carried out for all Ground Support Services staff. Air Mauritius has also conducted breast cancer screening with the collaboration of the Breast Cancer Association and healthy talks had been delivered by an experienced health promotion practitioner. Fact sheets on EVD and Conjunctivitis have been released and sensitization programmes have been run on EVD for airport employees with the collaboration of the Ministry of Health & Quality of Life. Hazardous Wastes Management Work activities at Technical Services lead to the generation of several hazardous wastes that are governed by the Standards for Hazardous Wastes Regulations of In line with our policy to protect our employees and the environment, nearly 3 tonnes of obsolete chemicals had been conveyed to an external hazardous wastes management facility in France for recycling, re-use and disposal according to international environmental norms. On the other hand, used oils, used Jet A1 fuel, unserviceable tyres and batteries were sent to local approved recyclers. Emergency Preparedness Plan Emergencies at the airport may have serious implications on the business continuity. In order to ensure that Air Mauritius would be able to cope with emergencies that can impact on its business operations, the Company has embarked in preparedness exercises through the following ways: Establishing a Contingency Plan against Communicable Diseases by putting in place a system for handling any outbreak or threat of communicable disease; Fire Drills had been organized to familiarize the employees with the procedures for handling aircraft and building fires at the Airport and the Company enlisted its participation in the AML Fireball and partial evacuation of the New Terminal Building due to air crash and fire respectively. Health & Safety Communication Communicating with employees has been in the mandate to ensure that all safety and health issues are addressed. In line with this objective, corporate as well as departmental safety and health Committees have had meetings on regular basis. On the other hand, new safety and health policies have been established namely the Drug & Alcohol Testing Policy, the Personal Protective Equipment and Clothing Policy, the Confined Space Policy, the Occupational Injury Leave Policy and the Non-Occupational Leave Policy while the Health & Safety Policies have been updated and posted in SharePoint. Corporate Sustainability and Social Responsibility Unit Air Mauritius has set up a Corporate Sustainability and Social Responsibility (CSSR) Unit which has for prime function to incorporate social and environmental considerations in its decision-making and be accountable for the impacts of its decisions and activities on society and the environment. This implies both transparent and ethical behaviour that contribute to sustainability of the Company, being in compliance with applicable law and is consistent with international norms of behaviour.

36 Annual Report 2014/15 I 33 Annual Report and Business Review Sustainability Report (Cont d) As part of the awareness programme, the CSSR unit met the internal stakeholders, members of the unions, enabling them to have a better understanding of the concept of Corporate Sustainability and Social Responsibility. The following key objectives were met: Air Mauritius Volunteers group The CSSR unit is evolving with the involvement of the employees to the maximum and as such a group of more than 75 Volunteers has been formed and are sharing their knowledge, experience, willingness and time to the service of the community at large on behalf of the Company as responsible employee and good citizen. Fight against gender-based violence A gender-based violence awareness training program was conducted in collaboration with the Ministry of Gender Equality, Child Development and Family Welfare. Air Mauritius being a responsible employer is conscious that Gender-based violence may cause health and psychological problems, in addition to a disruption of personal and intimate relationship, thus affecting productivity at work. The CSSR unit acts as a facilitator and channel issues to the right quarters or authority. Blood Donation Air Mauritius employees responded positively as responsible citizens to the urgent request of the Ministry of Health and has organised an event for blood donation to meet the blood shortage. Some 100 pints of blood were collected. Education to needy Children In line with the initiative to protect the children against any sort of exploitation, Air Mauritius participated in the educational activities of the M-Kids association and at the Fabrique de Sainte Croix to help the needy children within the catchment area of Pailles and Ste Croix respectively. Air Mauritius CSSR unit together with the Paille en Queue social club of Air Mauritius has joined TheCode. org initiative to protect the children against exploitation in the travel and tourism industry. The CSSR unit together with PEQ Social Club of Air Mauritius met the needy children of Cite Toile and Cite Lachaux at the Mahebourg Youth Centre for an educational program followed by a lunch. Environment Through its partnership with the Mauritian Wildlife Foundation (MWF), Air Mauritius launched the One Take-off, One Tree campaign, whereby one tree is planted for each take-off of an Air Mauritius plane. This partnership entails planting of 6,000 plants yearly in Mauritius and Rodrigues. Air Mauritius employees joined together with MWF for a weeding, plants potting and creation of a breeding zone for migrating sea birds at Ile aux Aigrettes. For the financial year 2014/2015, this campaign was furthermore accentuated when, back in November 2014, the Company joined the Tree Planting and Clean Air campaign launched by the Ministry of the Environment and Sustainable Development. This culminated with the distribution of 2,000 plants to the employees during February The Company is expecting the distribution of another 2,000 plants until May An official launching was held at the Airport. Enterprise Risk Management Risk Management is an increasingly important business driver that permeates throughout the enterprise. Risk may be a driver of strategic decisions but also may be a cause of uncertainty. Air Mauritius integrates risk management into its strategic and operational decision-making. The risks that the Company faces on a daily basis are numerous and it makes full use of its Enterprise Risk Management (ERM) as an integrated process for identifying, assessing and managing the overall risks that provides a broader framework for managing risk while keeping to its objective of maximizing shareholder value. Risk Management Structure The Company s management structures are designed to ensure enterprise-wide risks are properly identified, analysed, mitigated and managed allowing it to identify all of its risks and take a holistic view of its risk profile. Effective ERM is based on policies and processes that are established by the Company s Board of Directors with overall management of risks delegated to a subcommittee of the board - the Risk Management Steering Committee (RMSC).

37 34 I Annual Report and Business Review Enterprise Risk Management (Cont d) The RMSC is responsible for reviewing policies, defining risk tolerance and approving procedures and objectives. RMSC meets on a regular basis to set risk management policies and procedures, review, assess and ratify risk management activities. The Company has a Risk Management manual which provides guidelines for the establishment and implementation of the ERM process. The accountable managers of the department are responsible for risk management under a clear and predefined delegated authority. The Treasury & Risk Management Section works with each department to assist, advise and implement proactive risk management disciplines for mitigating risks identified, to more sustainable levels. Risks identified at departmental level are recorded in a Risk Register together with their action plans. Critical risks are noted and reported to the Risk Management Steering Committee and the Board. ERM Process - Organization chart Ultimate responsibility for effective management of risks - set strategies for the identification, analysis and management of the enterprise-wide risks Air Mauritius Board of Directors Risk Management Delegation Responsible for reviewing policies, defining risk tolerance and approving procedures and objectives Risk Management Steering Committee Report and advise on critical risks Works with each department individually to assist, advise and implement proactive risk management disciplines for reducing risks identified - Review the risk matrix annually - Define the Risk Management Manual Treasury & Risk Management Section Collaborate and support Responsible for risk management and continuity at departmental level Update Risk Register annually Conduct action plans in order to reduce risks to more sustainable level Departments and Accountable Managers

38 Annual Report 2014/15 I 35 Annual Report and Business Review Enterprise Risk Management (Cont d) Risk Management Methodology The goal of Enterprise Risk Management is to identify and address all potential risks and their root causes. The ERM program at Air Mauritius allows it to manage risks by identifying the business functions, processes and activities that created them and then developing and implementing strategies to minimize the potential exposure. ERM workshops (departmental and crossfunctional) are conducted annually with the assistance of a consultant to ensure that the full spectrum of risk - strategic, operational, financial and regulatory is identified, evaluated, managed and monitored. The risk matrix for both financial and non-financial is then reviewed. A bottom-up approach is adopted for the review exercise, whereby all risks that may cause a failure to achieve corporate objectives are identified and evaluated at departmental and cross functional levels. Actions Performed on an Annual Basis 1 Risk identification 2 Risk Assessment 3 Review list of risks identified during last update Identification of new risk issues Assess new risks Review action plans which were implemented since last update Update risk assessment taking into account environmental evolutions and new controls in place Risk Mitigation Define further risk treatment measures Conduct actions to set up new controls Report on actions performed Collaborative work between Treasury & Risk Management Section, User Departments, Risk Owners Workshops to update Risk Registers were undertaken in October 2014; the Risk Management Steering Committee (RMSC) reviewed the results of the risk mapping and the actions defined to improve risk mitigation across the organization.

39 36 I Annual Report and Business Review Enterprise Risk Management (Cont d) Risk mapping is based on:- a) Cross-functional workshops (rather than workshops at departmental level). This allows to improve coherence in risk assessment at enterprise level as well as a better alignment in risk mitigation plans definition and achievement. b) Scenario-based assessment, with the effect of introducing more objectivity and traceability in assessments. The scenario-based assessment approach supports that multiple loss scenarios are possible for a defined risk and a more efficient way in risk mapping was to choose a reference scenario in order to represent the risk. The likelihood and impact of the risk are determined through the reference scenario. The chosen scenario has to be serious since the concern is mainly for major risks control and mitigation, but needs to stay plausible because the risk mapping has to stick to reality. The scenario-based approach helps risk mapping assessments to be traceable and understandable. c) The concept of risk tolerance has been introduced in order to be able to challenge current risk level with regards to Air Mauritius financial resources and capacity. This is helping to better define risk mitigation priorities. Major Risk Areas By nature, the aviation industry is a highly specialized and regulated one, requiring adherence to specific rules and regulations in the conduct of airline business and other civil aviation activities. The scope of such regulation covers airport infrastructure issues, slots and capacity management, route flying rights, consumer rights and denied boarding, flight cancellation and delays, environmental requirements, security etc. The Company s ability to both comply with and influence any changes in these regulations is key to maintaining its operational and financial performance. The major risks categories identified during the Risk Management exercise are categorised below:- 1. Market Competition Risks ( e.g Competition from other airlines, Increased competition from destinations) Competition is becoming fiercer in Mauritius with airlines bidding for broader air access with increased frequencies and novel offers from other destinations. The aviation markets continue to be liberalised with competitors maintaining lower cost structures coupled with other competitive advantages. The downward pressure on yield persists as the Company tries to stimulate demand. The Company has taken robust and proactive measures in order to make its turnaround sustainable in the longer term. Management has responded to this risk by implementing a number of initiatives; the new business model and the 7-step plan, with the objectives of repositioning the Company and equally responding to competition in order to maintain passenger traffic. However, the Company has to remain alert to all development in that area and to constantly review its risk management strategies. 2. Business Model Risks (e.g Economic Crisis, No Long Term Sustainability) Failing economies, mostly in Europe have contributed to a sluggish airline environment. The global economic crisis has gathered momentum and is now affecting all countries with impact on consumer behaviour. The Company recognised the importance of revamping its business model. It remained focused and implemented measures that were crucial to ensure recovery and thereafter long term sustainability of our airline. Designed to bring recovery in the short term and give resilience to our business model to face the increasingly challenging environment, the 7-step Recovery and Game Changer plan s proactive measures focus on improving the Company s margin and profitability and prepare the Company for the post economic crisis. 3. Fleet and Network Risks (e.g delayed fleet renewal, loss of a code share partner airline) The Company operates a number of aircraft based on a certain number of economic assumptions. When economic cycles change, it is very difficult for the Company to readjust the fleet size accordingly. The Company addresses this issue by: Having a mix of new and old aircraft in its fleet so that unencumbered aircraft can be leased out or disposed of at short notice. Financing its aircraft on both financing and operating leases to increase flexibility. The new generation, more fuel efficient aircraft as step 5 of the 7-step plan. Fleet flexibility, swap in aircraft types, decision deadline to confirm delivery, option rights and purchase rights are some of the levers considered. 4. Leadership Risks (Organisation not aligned on corporate strategy, Inadequate external communication) The Company has a Crisis Communication Process within its Crisis Management Centre, a Media monitoring set up, PR Agencies across the network, a restricted external communications policy and a Social media communication in place as mitigating actions.

40 Annual Report 2014/15 I 37 Annual Report and Business Review Enterprise Risk Management (Cont d) The Company also communicates regularly with its team members the corporate strategy by way of written communication, collaborative management workshops and structured departmental meetings. 5. Fraud Risks (Embezzlement, Banking Fraud Cards) Air Mauritius mitigated this risk by having a proper and efficient system of internal controls corporate-wise which is subject to regular internal and external audits. The internal audit department reports risk issues identified directly to the Audit Committee together with the actions taken to remedy the weaknesses. The Company has a detailed Fraud Prevention Policy which outlines procedures for prevention, detection and investigation of suspected frauds and irregularities. Staff and other stakeholders reckon the need to act with integrity and report all suspicious transactions to relevant authorities in accordance with Code of Business Practice and Ethics, Company procedures and the requirements of the law. The Code, which is applicable to all Directors and staff, is one of the key pillars implementation of high standards in corporate governance throughout the Group. 6. Major Events (e.g Aircraft Crash, Pandemic Alert) An aircraft crash may cause major disruptions to our operations. The Company ensures that its Emergency Procedures manual is regularly reviewed and updated with the support of consultants, to meet and align with best practice standards. At regular intervals, classroom training on emergency procedures are undertaken and crisis simulations are regularly carried out to familiarise staff with those procedures and ensure that everyone is clear about his role in emergency situations. Pandemics and Epidemics: The Company can be severely hit by epidemics and pandemics as well as other health risks; which are beyond its control. The Company can only, to a certain extent, control the impact of these risks on its business performance by the monitoring of health alerts and flights modulations. 7. Disruptions in Operations a) IT as Facilitator The modern working environment relies heavily on technology and e-commerce to deliver key functions. The impact of unavailability and breakdown of IT services hosting critical applications for e.g. services, ERP, Maintenix, AF inventory is immediate and potentially devastating to the business. The Company mitigates these risks in the following ways: Having off-site back-up systems, replication of servers between 3 sites (airport, Ebene Office and Head Office). Ensuring maintenance and regular checks. On-time renewal and Upgrade of main Servers and Storage equipment to replace ageing hardware so as to minimise system downtime/unavailability that can result from hardware failure. Regular upgrade & reinforcement of current Backup systems with new enhanced features e.g. duplication for faster backups, synthetic backups. Implementation of latest and more robust replication systems & data from main data centre in Ebene to disaster recovery site. Having simulations of redundant and fail-over systems, rehearsal of reinstallations and restorations from back-up tapes, testing of disaster recovery site. Computer security standards, including ongoing back-up structures, have been developed in-house and by third parties to ensure that IT and other systems are reliable and well protected against threats of hackers and viruses. b) Industrial relations The Company s unionised workforce comprises of six unions and providing and maintaining an unfailing, trustworthy, healthy, safe and secure working environment is of paramount importance to the organisation. Collective bargaining takes place on a regular basis and a breakdown in the bargaining process could disrupt operations and adversely affect business performance. Management recognizes that and encourages effective communication with the Unions to maintain this state of affairs. c) Business Continuity A range of events can severely disrupt organisations and bring it to a standstill. The Company has considered all foreseeable eventualities and has identified the actions it needs to take to respond to a crisis for different categories of risk. The Business Continuity Programme includes backup procedures, standby facilities as well as emergency procedures. It forms an integral part of the management of enterprise wide risks covering ground operations, aircraft operations, information technology security and safety.

41 38 I Annual Report and Business Review Enterprise Risk Management (Cont d) 8. Safety and Security The safety and security of the Company s customers and employees are fundamental values for the Company. Failure to prevent a major security or safety incident would harm both the Company s operations and financial performance. The Company s business depends on the absolute assurance of safe and secure operations, both in the air and on the ground and has in place a flight safety and security policy that ensures that priority is given to this objective for the safety of its passengers. It acknowledges the duty of care it owes to its shareholders & stakeholders and is committed to establishing and sustaining a culture of safety and security within the organisation. 9. Reputation The Company faces reputation risk and consequently loss of public confidence when it is confronted to a negative perception. It recognizes reputation as an ongoing risk that can aversely or beneficially impact the organization s reputation and the very survival of its business depends on continued credibility and trust. It therefore works constantly to improve its image with all stakeholders, maintaining their trust and confidence. The Company also acknowledges that reputational risks may occur as a direct result of people failing to communicate properly. It demonstrates the importance that it places on communication with its internal and external stakeholders by bringing under one roof all the communications functions including management of the corporate identity and brand, corporate affairs, events management, corporate social responsibility and employee and investor communications. It focuses on further improving governance issues and ensures consistency in its relationship with local and international institutions, shareholders and other investors, the media and the general public. Its communications systems and public relations machinery are well prepared so that both staff and general public are well informed about the Company s activities and performances. 10. Legal and Regulatory Risks The Company s business and reputation may be harmed if it fails to comply with the applicable new or changed laws and regulation or governance standards or changes in interpretation of laws and regulations. It also has to manage the risk of loss that may be caused by a defective transaction, a claim resulting in liability for the Company or a failure to adequately protect assets owned by the Company. The Company actively monitors these risks through its Legal Section which ensures that all contracts are properly vetted and that legal risks pertaining to these agreements are adequately understood, properly identified and integrated into strategic decisions. Insurance The Company subscribes to essential insurance covers of types customary in the airline industry, designed to protect against loss exposures that could result in bankruptcy and at amounts deemed reasonable and adequate to protect its assets, to meet its liabilities, to comply with civil aviation regulations and to comply with credit and lease agreements. The policies principally provide All Risks, War and Terrorism coverage for loss or damage to aircraft, engines and spare parts, passenger and third party liability, property damage, cargo and baggage liability and employee liability. Claims not covered by or exceed insurance limits The Group believes that its insurance covers would substantially mitigate the effect of claims likely to be brought against the Group in foreseeable circumstances. However, even though the Group takes care to update its limits based on worldwide trends, insurance limits can sometimes be broken and uncovered claims may emerge with consequent risk of additional cost or loss. 11. Financial Risks As an airline with worldwide operations, Air Mauritius is exposed to financial risks that are mainly exchange rate, jet fuel price and interest rate movement risks, as well as credit and liquidity risks. The objective of the financial risk management at Air Mauritius is to minimise the negative impact of these market fluctuations on the Company s earnings, cash flows and equity. The Board of Directors sets the Risk Management policies and objectives of the Company and lays down the parameters within which the various aspects of Treasury risk management are operated. The Board through its Risk Management Steering Committee (RMSC) has approved a Risk Management Manual, which outlines the Company policies and procedures for managing corporate and asset financing and financial risks. In carrying out its hedging activities and implementing its risk management strategy, Air Mauritius is guided by the provisions of its Risk Management Manual. The manual requires that the Company be hedged against variations in jet fuel prices and exchange rates. For jet fuel and foreign currency risk management, the minimum and maximum hedge ratios of 30% and 70% respectively are for a maximum tenor of 2 years, on a rolling basis.

42 Annual Report 2014/15 I 39 Annual Report and Business Review Enterprise Risk Management (Cont d) The RMSC is apprised of all the hedge transactions entered into by management. a) Foreign Exchange There has been an increasing exposure in emerging currencies like South African Rand (ZAR), Indian Rupee (INR), and Chinese Yuan (to some extent due to the USD peg) as Air Mauritius brought about changes in its network and operations in line with the 7-step plan. However, the Euro parity versus the USD remains the major currency risk exposure to Air Mauritius. The revenue stream of the Company is still considerably in Euro whilst on the other hand, the Company pays a significant proportion of its expenses in USD, a currency in which it earns a very small proportion of its revenues. The Company continues to report its Financial Statements in Euro, and consequently, the depreciation of the Euro and the emerging markets currencies vis a vis the USD represents a risk which the Company needs to manage. During the financial year 2014/2015, the EUR/USD traded within a wide range from a low of to a high of The European single currency remained under heavy pressure amid the economic data and monetary policies at year end. During the financial year s first quarter, despite stronger US data releases, US treasury have eased the US economy and the labour markets were still falling short of the US Federal Reserve objectives and hence the continuation of the accommodative policies. In June 2014, the European Central Bank (ECB) cut its deposit rate below zero to minus 0.10 percent in an unprecedented move to counter the prospect of deflation in the Eurozone the world s second largest economy. The second quarter of the financial year started with the European Central Bank agreement to the key details regarding the operation of its new programmes to buy simple and transparent asset-backed securities (ABSs) and a broad portfolio of euro-denominated covered bonds. Together with the targeted longerterm refinancing operations, the purchase programmes would further enhance the transmission of monetary policy. This facilitated credit provision to the Euro area economy, generated positive spill-overs to other markets and, as a result, eased the ECB s monetary policy stance. At the same time, US Federal Reserve made an optimistic assessment of the economic recovery in the US as compared to the challenges being faced by Europe. This also led to an end of the US Federal Reserve s monthly bond purchase program at end of October 2014 when EUR/USD dropped to In January 15, The ECB announced an expanded asset purchase programme. Aimed at fulfilling the ECB s price stability mandate, this programme would see the ECB add the purchase of sovereign bonds to its existing private sector asset purchase programmes in order to address the risks of a too prolonged period of low inflation. The Governing Council took this decision in a situation in which most indicators of actual and expected inflation in the Euro area had drifted towards their historical lows. As potential second-round effects on wage and price-setting threatened to adversely affect medium-term price developments, this situation required a forceful monetary policy response. In March 2015, the Euro hit a low of USD as Greek debt concerns and ECB bond-buying program were keeping the Euro undermined. The situation in Greece had again come to the forefront after the meeting of Eurozone finance ministers. The Euro rallied however after ECB President Mario Draghi said that consumer prices expected to rise gradually by the end of the year even if they might remain very low or negative in the months ahead. In addition Investors remain bullish on Europe due to both improved growth prospects and ECB Quantitative Easing. b) Jet Fuel Price Risk Jet fuel is a major variable cost component for Air Mauritius, accounting for around 40 % of total costs. The risk associated to fluctuations in the price of jet fuel is managed by various hedging techniques as well as the use of fuel surcharge, whereby some of the cost is passed on to the customer. Air Mauritius uses predominantly Brent crude as proxy for monitoring and hedging against increases in the price of jet fuel. During financial year 2014/2015, Brent prices traded in the USD 46 USD 117 per barrel. Inventories report and geopolitical tensions have dominated oil market during the financial year. Brent price was trading at the high of USD 117 per barrel during the financial year s first quarter mainly due to the geo-political tensions which included the growing tensions in Ukraine, Rebel leaders blocking the reopening of East Libyan ports and violence in Iraq (OPEC second largest oil producer).

43 40 I Annual Report and Business Review Enterprise Risk Management (Cont d) During the financial year s second quarter, excess supply in the North Sea and Atlantic Basin, increase in Libya s oil output and greater crude oil production in Iraq s southern fields contributed to the increase in inventories and supplies. Geopolitical disturbances had failed to meaningfully affect production. Weaker growth in China and Europe and cuts in the number of refinery runs led to a drop in crude demand. US crude stockpiles also climbed to the highest levels due to increase in shale oil production as Brent Crude traded at USD 80 per barrel in the run up to the OPEC meeting. At that crucial OPEC meeting in late November, the OPEC s crucially decided not to cut output and maintain its daily target in a move to defend and maintain their global market share. The combination of robust US crude oil production growth, a return of Libyan production (despite recent setbacks), weakening expectations for the global economy (particularly in China) and seasonally low refinery demand drove prices lower to the sub USD 60 per barrel and briefly to sub USD50 per barrel. Overall, markets remained well supplied and Brent Crude was fairly range bound around USD 60 per barrel at year end. possible ISDA (International Swap Derivatives Association) agreements with financial institutions with whom it carries out hedging activities. These afore-mentioned measures ensure that credit risks are minimized. d) Interest rate risk Air Mauritius earnings are also affected by changes in interest rates due to the impact of such changes on interest income and expenses from short term deposits and other interest bearing financial assets and liabilities. Air Mauritius mitigates this risk by having a loan portfolio which carries both fixed and floating rates. Short term facilities also bear floating interest rates. Sensitivities regarding movements in interest rates are given in the note 5 of the financial statements. e) Liquidity risk Liquidity risk is the risk that the Company will be unable to meet its obligations as they come due because of an inability to liquidate assets or obtain adequate funding. The Company mitigates this risk by careful cash flow planning and regularly reviews of the facilities it has in place with its banking partners. c) Counterparty credit risk The Risk Management Manual requires that the Company deals with only approved financial institutions. Overall exposure to each approved financial institution, including local Mauritian banks, is well defined. The Company has in place wherever

44 Annual Report 2014/15 I 41 Annual Report and Business Review Remuneration Report Remuneration and benefits Remuneration and benefits of Executive Director Fees paid during the year to Non-Executive Directors* Fees paid to the Executive Directors by subsidiaries 7 4 Fees paid to the Non-Executive Directors by subsidiaries * Monthly fees paid to each Non-Executive Director amounts to Rs 15,000 (Euro 378) except for the Chairman who was paid a monthly fee of Rs 75,000 (Euro 1,890). The fees exclude any amount of reimbursed expenses incurred wholly, exclusively and necessarily for the business. The Company provides the Executive and all Non-Executive Directors with the privilege of a reasonable amount of air tickets for themselves and their immediate family. The value of this privilege is not considered to be a part of their remuneration. Particulars of service contract of Executive Director The term of the service contract of the Executive Director is for a period of 3 years ending 29 August 2015 renewable at the Company s option for further periods of 3 years. The notice period for termination of the contract by either is 6 months. The contract provides for a compensation of 6 months to be paid to the Executive Director in the event of termination by the Company. The current Executive Director has signified his intention of not seeking for a renewal of his contract on its expiry. except for and to the extent that the Company has indemnified the insured. (ii) the loss of the Company resulting from any claim made against the insured for any wrongful act in the insured s capacity as a director, officer or employee (in a managerial or supervisory capacity) of the Company but only when and to the extent that the Company has indemnified the insured for the loss. The limit of liability is: First cover: USD 10M in the aggregate (including defense costs); Excess Layer cover: USD 10M in the aggregate including costs and expenses. Directors and officers liability insurance The policy covers: (i) the loss of each insured (a director, officer and employee in a managerial or supervisory capacity) resulting from any claim made against the insured for any wrongful act in the insured s capacity as a director, officer or employee of the Company

45 42 I Annual Report and Business Review Remuneration Report (Cont d) Directors share interests Ordinary shares held on March 31, 2015 Direct Indirect Mr Bissoon Mungroo, GOSK 16,100 - Mr Louis Rivalland Mr Francois Woo Shing Hai, GOSK 3,980 3,980 Auditors remuneration The remuneration payable to the auditors was as follows: The Company Subsidiaries Audit services Other services Remuneration for other services is derived from the provision of tax advice and other agreed upon procedures reports. Approved by the Board of Directors on June 18, 2015 and signed on its behalf by: Dr Arjoon Suddhoo Chairman of the Board Mr Louis Rivalland Director & Chairman of the Audit Committee

46 Annual Report 2014/15 I 43 Management Discussion and Analysis

47 44 I Management Discussion and Analysis Global Airline Context The financial year 2014/2015 witnessed a decline in fuel prices as from October 2014, depreciation of the Euro and Mauritian Rupee vis-à-vis the US Dollar, and a slow recovery of the global economy. The Euro Zone turned from recession to a modest growth of 0.9% in The highest growth emanated from the Emerging and Developing Asia region namely China, India, and the Asian countries (Indonesia, Malaysia, Philippines, Thailand and Vietnam). However, the performance of China slowed down from a growth of 7.8% in 2013 to 7.4% 2014, and indicators point to a further slowdown. Similarly, the performance of Asian countries fell from 5.2% in 2013 to 4.6% in On the other hand, India s growth improved from 6.9% in 2013 to 7.2% in Competitive Landscape for Air Mauritius Air Mauritius has witnessed an intensification of competition from Europe, Asia and within the Indian Ocean region during financial year 2014/2015 on account of the following developments: Thomson Airways introduced a weekly flight between London Gatwick and Mauritius effective end April Corsair added a 4th weekly B747 flight between Paris and Mauritius during Winter 2014/2015. China Southern Airlines introduced a weekly flight between Shenzhen and Mauritius effective end of June 2014 and a second weekly flight as from January Route Network a) Online Destinations Air Mauritius maintained its online network of 20 points in 2014/2015 as follows: Regions Europe Asia Australia Africa Indian Ocean Destinations Paris, London Hong-Kong, Singapore, Shanghai, Beijing, Kuala-Lumpur, Mumbai, Delhi, Chennai, Bangalore Perth Johannesburg, Cape-Town, Durban, Nairobi Antananarivo, Saint-Denis, Saint-Pierre, Rodrigues Moreover, Air Mauritius served the Mauritius-Dubai vice versa sectors as marketing carrier on the double daily flights operated by Emirates. b) Network Connectivity Air Mauritius has continued to consolidate the Origin & Destination model during 2014/2015 through leverage of the hub structure at its Mauritius base and the regional outstation hubs supported by airline partnerships namely Paris for Europe, Kuala Lumpur for East Asia, Perth for Australia, Johannesburg for Sub Saharan Africa and Nairobi for Central/Northern Africa. Emirates upgraded its twice daily 777 frequencies on the Mauritius-Dubai route to A380 aircraft in December 2013 and October 2014 respectively. Air Seychelles added a 4th weekly A320 flight between Mauritius and Seychelles effective December South African Airways added a 10th weekly frequency on the Johannesburg-Mauritius as from Winter 2014/2015. Austrian Airlines, Lufthansa and Neos Airline will start operation to Mauritius during the financial year 2015/2016.

48 Annual Report 2014/15 I 45 Management Discussion and Analysis Route Network (Cont d) c) Codeshare Destinations Beyond Paris (CDG) Effective August 2014, Air Mauritius carried its code to five new points beyond Paris Charles de Gaulle (CDG), namely Copenhagen, Stockholm, Gothenburg, Oslo and Stavanger. The codeshare on Bristol in UK was discontinued as from Summer 2014 following withdrawal of AF operations from this point. This has resulted in 37 destinations served by Air Mauritius with its code beyond Paris across eleven countries as follows: France Spain UK Germany Austria Italy Brest, Bordeaux, Clermont-Ferrand, Lyon, Montpellier, Marseille, Nice, Nantes, Pau-Pyrénées, Rennes, Toulouse, Mulhouse Barcelona, Bilbao, Madrid, Vigo Aberdeen, Birmingham, Edinburgh, London-Heathrow, Manchester, Newcastle Dusseldorf, Frankfurt, Munich Vienna Rome, Bologna Beyond Kuala Lumpur Under the cooperation with Malaysia Airlines, Air Mauritius carried its code beyond Kuala Lumpur on the following 10 points: Malaysia China Singapore Hong Kong Thailand Beyond Perth Langkawi, Kuantan, Penang, Kota Bharu, Johar Bahru Shanghai, Beijing Singapore Hong Kong Bangkok Under the cooperation with Virgin Australia, Air Mauritius carried its code beyond Perth on 4 points namely Melbourne, Sydney, Adelaide and Brisbane. Beyond Dubai Effective July 2014, Air Mauritius has placed its code beyond Dubai on Emirates operated flights on three points namely Cairo, Karachi, and Colombo. Three additional points were added in January 2015 namely, Riyadh, Jeddah & Dammam. Switzerland Netherlands Denmark Sweden Norway Zurich, Geneva, Basel Amsterdam Copenhagen Stockholm, Gothenburg Oslo, Stavanger

49 46 I Stavanger Aberdeen Oslo Gothenburg Stockholm Birmingham Edinburgh Newcastle Manchester LONDON (Heathrow) PARIS Amsterdam Dusseldorf Frankfurt Copenhagen Brest Rennes Nantes Clermont Ferrand Lyon Munich Zurich Geneva Bordeaux Basel/Mulhouse Vigo Toulouse Montpellier Bilbao Nice Bologna Pau-Pyrenees Marseille Madrid Barcelona Europe Rome Vienna Cairo Jeddah INTERNATIONAL ROUTE MAP Dammam Riyadh Dubai Mumbai INDIA Delhi Karachi hare Flights with Partner Airline ons via our hubs as Marketing Carrier:- partnership with Air France mpur in partnership with Malaysia Airlines artnership with Emirates artnership with Virgin Australia Airlines tions with: s and Paris een Mauritius and Johannesburg odeshares on Air Mauritius operated flights Codeshare Partner AFRICA Johannesburg SOUTH AFRICA Cape Town KENYA Nairobi MADAGASCAR Antananarivo Durban Indian Ocean Bangalore RODRIGUES MAURITIUS REUNION (St.Denis & St. Pierre) Chennai Colombo nai, Bangalore) Air India Kenya Airways Air Madagascar g) Malaysia Airlines Air France Kenya Airways, Air Austral & Air France Malaysia Airlines rre ) Air France d on latest facts available at the time of o change without prior notice. June 2015

50 Annual Report 2014/15 I 47 Air Mauritius Operated Flights Air Mauritius Marketing Codeshare Flights Air Mauritius joint operations with Partner Airline Chengdu Beijing CHINA Shanghai MK serves various destinations via our hubs as Marketing Carrier:- 37 destinations via Paris in partnership with Air France 10 destinations via Kuala Lumpur in partnership with Malaysia Airlines 6 destinations via Dubai in partnership with Emirates 4 destinations via Perth in partnership with Virgin Australia Airlines Air Mauritius has joint operations with: Air France between Mauritius and Paris South African Airways between Mauritius and Johannesburg The following airlines have codeshares on Air Mauritius operated flights Langkawi Penang Hong Kong MALAYSIA Bangkok Johar Bahru Pacific Ocean Kota Bharu Kuantan Beijing Shanghai Hong Kong KUALA LUMPUR Singapore AUSTRALIA Destination Codeshare Partner India (Mumbai, Delhi, Chennai, Bangalore) Air India Kenya ( Nairobi ) Kenya Airways Madagascar (Antananarivo) Air Madagascar South Africa (Johannesburg) Malaysia Airlines South Africa (Durban) Air France Australia (Perth) Kenya Airways, Air Austral & Air France Malaysia ( Kuala Lumpur ) Malaysia Airlines Reunion ( St Denis & St Pierre ) Air France NOTES: All information shown is based on latest facts available at the time of printing and may be subject to change without prior notice. June 2015 PERTH Brisbane Sydney Adelaide Melbourne

51 48 I Management Discussion and Analysis Aircraft Fleet a) Fleet Composition During the financial year 2014/2015, Air Mauritius fleet consisted of 12 aircraft, comprising of 8 wide body, 2 narrow body and 2 turbo prop aircraft as per table below: Aircraft type Fleet Owned/ Finance Lease Operating Lease Total Seat Capacity Airbus A C Wide Body Airbus A E Wide Body Airbus A Wide Body Airbus A Narrow Body /132 ATR Turbo Prop Total Bell Ranger Helicopter At the end of March 2015, the average age of the overall aircraft fleet stood at 12.0 years, with the average age of both the wide-body and narrow body fleets standing at 12.7 years and that of the turbo prop fleet at 8.5 years. b) Fleet Deployment The A fleet has been mainly deployed to Europe and China long haul routes taking into account payloadrange capability, while the medium haul operations to India, South East Asia and Perth have essentially been covered by the A fleet. A mix of wide and narrow body aircraft have been deployed to Africa, Madagascar, and Reunion taking into account both passenger and cargo requirements. The ATR fleet has been deployed on Reunion and Rodrigues. c) Fleet Utilisation Total block hours for the fleet stood at 43,081 hours in 2014/2015, representing an increase of around 3% over 2013/2014. The table below provides a breakdown of number of flights, block hours and average daily utilisation by aircraft fleet: Aircraft Fleet Total Block Hours Average Daily Utilisation (Block Hours) A , A , A , ATR , (d) A Fleet Renewal A fleet planning study addressing renewal of the ageing A fleet and Air Mauritius long term wide-body fleet requirement was completed in Air Mauritius plans to phase out its A340s aircraft with 6 new Airbus A XWB aircraft over a period of time. Two of the A aircraft will be acquired on operating lease and will be available in September and October 2017 respectively. The remaining four A aircraft will be direct orders, with 2 aircraft expected to be delivered in the 4th quarter of 2019 and 2 in the 3rd & 4th quarter of 2020 respectively. The cabin definition of the first two leased A aircraft is currently underway. Bilateral Air Services Agreements During the financial year 2014/2015, new Bilateral Air Services Agreements were concluded between Mauritius and three countries namely the Czech Republic, Iceland, and Uganda. Traffic rights available under existing Air Services Agreements have been further improved, mainly in terms of airline designation, additional frequency entitlements and codesharing rights, between Mauritius and the following countries: Austria, India, Indonesia, Tanzania, Kenya, and Seychelles. The availability of these additional traffic rights will be useful for Air Mauritius for its future network development and codeshare expansion plans.

52 Annual Report 2014/15 I 49 Management Discussion and Analysis Aero-Political and Industry Developments The major developments on the aero-political and industry front during the year include the following: a) Air Transport within the Indian Ocean Region and Africa (i) In the context of regional cooperation and with a view to improve connectivity between the Indian Ocean islands, a Strategic Committee of national airlines of the Indian Ocean has been set up under the Indian Ocean Commission. This Strategic Committee aims to explore opportunities to strengthen cooperation between the airlines in order to enhance air services in the region. Air Mauritius is part of the Committee which also includes Air Austral, Air Seychelles, Air Madagascar and the Ministry of Transport of the Union of Comores in the absence of a Comorian airline. (ii) Within Africa, the regional blocks, namely the African Union, COMESA and SADC have continued to lobby for air transport liberalization. Eleven of the fifty three African Union Member States declared their commitment to the implementation of the Yamoussoukro Decision by b) ICAO s Global Solution to Climate Change In October 2013, the International Civil Aviation Organization (ICAO) agreed to develop a global market-based mechanism to address international aviation emissions by 2016 that would be implemented by In this regard, the ICAO Council agreed on a clear process and roadmap, with expected milestones and necessary governance structure. The European Union has decided in April 2014 to limit the scope of the European Union s Emissions Trading Scheme to include only flights within Europe until c) Safety Aviation remains the safest mode of transport. The 2014 global jet accident rate (measured in hull losses per 1 million flights) was 0.23, which was the lowest rate in history and the equivalent of one accident for every 4.4 million flights. An Aircraft Tracking Task Force (ATTF) was established by IATA to identify technical and procedural options to enable flight tracking capability around the globe. The task force has produced a report to improve aircraft tracking capabilities globally. d) Ebola Outbreak In 2014, the air transport industry had to deal with the outbreak of the EVD in West Africa, which affected international air travel particularly in Guinea, Liberia and Sierra Leone. Air Mauritius has monitored the situation closely based on the updates from the World Health Organisation, IATA, ICAO and the local authorities. e) Passenger Rights Following the European Parliament s decision in February 2014 to bring reforms to the current regulations on passenger rights, a form of agreement within the EU Council is expected to be adopted in June 2015, with the new rules potentially entering into force in Airline Alliances and Partnerships During financial year 2014/2015, Air Mauritius continued with its strategy of leveraging on airline partnerships as a major strategic tool to further increase Air Mauritius geographical reach and network expansion. Air Mauritius is pursuing enhanced cooperation opportunities with existing partners while developing new cooperation arrangements with potential partners. The year 2014/2015 has witnessed the implementation of two milestone agreements in Air Mauritius, namely, the renewal of the Joint Venture Agreement with Air France on the Mauritius-Paris route and beyond and the enhanced cooperation agreement with Emirates which opens the way for the airline to sell beyond Dubai. Beyond Paris codeshare destinations to Scandinavia have been added with Air France and Air Mauritius has also added beyond Dubai codeshare destinations with Emirates. In addition to the above, cooperation arrangements with partner airlines namely Malaysia Airlines, Air India, South African Airways, Kenya Airways, Air Madagascar, Virgin Australia and Air Austral were maintained during the financial year and avenues for enhancing the cooperation arrangements were explored. Furthermore, new partners were approached and discussions to expand the codeshare portfolio are ongoing. a) Air Mauritius / Air France In order to consolidate and further develop Paris Charles de Gaulle as the Air Mauritius hub in Europe, the Joint Venture Agreement with Air France which covers the Mauritius-Paris and vice versa route as well as destinations beyond Paris and destinations beyond Mauritius, has been renewed for a period of 5 years effective 01 April 2014.

53 50 I Management Discussion and Analysis Airline Alliances and Partnerships (Cont d) a) Air Mauritius / Air France (Cont d) During financial year 2014/2015, Air Mauritius added 5 new beyond Paris codeshare points in Scandinavia (Norway, Denmark, Sweden) thus bringing the total number of beyond Paris codeshare destinations to 37. More beyond Paris codeshare destinations will be added as and when additional third country codeshare rights become available. In addition to Reunion Island, Air France started codesharing on Air Mauritius flights beyond Mauritius to Perth and Durban during financial year 2014/2015. b) Air Mauritius / Malaysia Airlines Air Mauritius and Malaysia Airlines have a free flow codeshare agreement on the trunk route between Mauritius and Kuala Lumpur which also extends to cover domestic codeshare and third country codeshare. During the year 2014/2015, Air Mauritius operated three weekly frequencies on Kuala Lumpur in codeshare with Malaysia Airlines as the marketing carrier. The Air Mauritius/Malaysia Airlines codeshare agreement also covers sectors beyond Kuala Lumpur to 5 domestic points and 5 international points. Malaysia Airlines also codeshares on Air Mauritius operated flights between Mauritius and Johannesburg. c) Air Mauritius / Air India Air Mauritius and Air India have had a soft block codeshare arrangement of 16 seats (2 Business Class seats and 14 Economy Class seats) on all the flights between Mauritius and India. During the year 2014/2015, Air Mauritius remained the sole operator and flew to the following four destinations in India Mumbai/Delhi/Chennai/Bangalore. Air Mauritius and Air India have agreed to convert, effective April 2015, the soft block codeshare arrangement into a free flow codeshare arrangement. Furthermore, Air Mauritius and Air India have agreed to consider adding beyond Mauritius codeshare destinations to the cooperation, as well as domestic India codeshare points. d) Air Mauritius / Emirates In December 2013, Air Mauritius and Emirates signed an enhanced commercial agreement which strengthens the cooperation on the Mauritius-Dubai route while also providing access to points beyond Dubai and Mauritius. The agreement allows Air Mauritius to leverage on Emirates extensive network to develop other destinations. On the Mauritius/Dubai route, Air Mauritius has a soft block allotment of 63 seats (2 First Class seats, 8 Business Class seats and 53 Economy Class seats) on the Emirates operated Airbus A380 aircraft. During financial year 2014/2015, Air Mauritius and Emirates have added 6 beyond Dubai codeshare points to 4 countries within the scope of the codeshare arrangement. These are Egypt (Cairo), Pakistan (Karachi), Sri Lanka (Colombo) and Saudi Arabia (Riyadh, Jeddah and Dammam). Other countries will be added as and when the required traffic rights are available. Furthermore, Air Mauritius and Emirates have also agreed to explore other areas of cooperation to strengthen the partnership. e) Air Mauritius / Virgin Australia Since December 2013, Air Mauritius and Virgin Australia are in a free flow codeshare agreement. Under this codeshare agreement, Air Mauritius codeshares as a marketing carrier on Virgin Australia operated domestic Australia flights beyond Perth, to/ from Adelaide, Brisbane, Sydney and Melbourne, which connect on Air Mauritius operated Mauritius Perth Mauritius flights. This agreement provides the possibility for Air Mauritius passengers to connect to 4 destinations in Australia via our Perth hub, thus further expanding our network in Australia. f) Air Mauritius / South African Airways Currently, Air Mauritius and South African Airways cooperate on the route MRU-JNB-MRU, where both operate. Air Mauritius and South African Airways have a soft block arrangement of 10 seats (2 Business Class seats and 8 Economy Class seats) on each other s flights. Discussions between Air Mauritius and South African Airways are ongoing on ways to reinforce and expand the current cooperation arrangement. g) Air Mauritius / Kenya Airways Air Mauritius and Kenya Airways are into a free flow codeshare arrangement since August The codeshare covers all flights operated between Mauritius and Nairobi, where Air Mauritius is the operating carrier and Kenya Airways the marketing carrier. The provision of the codeshare arrangement also extends to cover beyond codeshare. Kenya Airways places its code on Air Mauritius operated flights to Perth. Beyond Nairobi codeshare destinations will be added as and when third country codeshare rights and other approvals from authorities are obtained.

54 Annual Report 2014/15 I 51 Management Discussion and Analysis Airline Alliances and Partnerships (Cont d) h) Air Mauritius / Air Austral Air Mauritius and Air Austral currently have a free flow codeshare agreement whereby Air Austral is the marketing carrier on Air Mauritius flights to/from Perth. i) Air Mauritius / Air Madagascar Air Mauritius and Air Madagascar entered into a free flow codeshare agreement effective January 2013, on the Mauritius-Antananarivo route, whereby Air Madagascar places its code on Air Mauritius operated flights. Air Mauritius and Air Madagascar are exploring avenues to expand the perimeter of the cooperation between both airlines. 2015/2016 Operating Plan Key developments planned for the year 2015/2016 include the following: New scheduled online operations on Chengdu with a weekly flight to be introduced effective July Right-sizing of the base weekly operations on Shanghai to two flights and on Beijing to one flight effective April 2015 taking into account the 2014/2015 performance. Addition of a fourth weekly base flight on Mumbai effective November 2015 to tap the growing traffic potential of the Indian market. Upgrade of the Bangalore/Chennai weekly combined flight from A to A to cater for extra capacity. Operation of a third weekly flight on Nairobi effective July 2015 to support Nairobi as a hub for northern and western Africa. Introduction of a third base flight on Rodrigues on Mondays and Fridays throughout the year to support the growing demand for air travel on the route. Effective August 2015, discontinuation of the Johannesburg week-end flight requiring overnight layover, but maintaining the daily flights. Rescheduling of the Wednesday Antananarivo flight to Monday effective May 2015 to meet market requirements. Cargo Performance The Cargo business remains a vital contributor to the overall financial performance of Air Mauritius. It continues to optimise belly hold capacity deployed on all the passenger flights. Cargo carried by Air Mauritius during the financial year 2014/2015 amounts to 35,500 tonnes as compared to 31,800 tonnes in 2013/2014. Demand for air cargo was substantially reduced for the past couple of years due to the underperforming world economy and a lackluster growth in trade, particularly trade in the commodities that are traditionally carried as air cargo. Shifting of manufacturing base to other countries together with changes in the containership industry has seen a reduction in the demand for air cargo capacity. Shippers now have the possibility to move their freight away from air cargo to maritime when schedules and time commitments permit. The reduction in freight volumes led to a global imbalance of supply and demand with too much capacity chasing too little available air cargo in the market. All major markets were affected when the resultant fall in volumes and the intense competition put pressure on prices which bring down yields and revenue. Cargo revenue was also hit by the depreciation of the Euro during this financial year. Ongoing Commitment to Quality Despite the slowdown in global economy, Air Mauritius remains dedicated in delivering high quality service to our customers. Quality audits carried out during the year validated our status as ISO 9001:2008 certified and confirmed that the Quality Management Systems in place are of international standards. Furthermore, to better prepare our staff in servicing our customers, regular training and support are provided to all our Team Members. Our focus on quality and Customer service made us achieve Skytrax 4-Star status during this financial year. New Developments To consolidate further our revenue and extend our network, new agreements were established with other Airlines and Trucking companies providing us with opportunities to use their capacity to reach more offline points and increase our market penetration.

55 52 I Management Discussion and Analysis Cargo (Cont d) New Developments (Cont d) In terms of technology, the following projects were initiated during the year to meet the ever changing industry requirements and also adapt to customers needs: Cargo Track and Trace facility using SMS which will improve our customer service by allowing real time information on status of cargo shipment. Enhancement of the existing cargo dashboard to allow better monitoring of the business. Cargo BI (Business Intelligence) platform updated with new models for better analysis of our performance. The e-awb penetration in the network. Way Forward For 2015, the concern is about the escalating costs and weakening load factors and yields. Pressure from competition from existing and new entrants will also become another big challenge with regard to supply and demand imbalance. In view of the uncertain business environment, we will continue to be flexible in deploying our resources, alert and proactive on all sales opportunities and vigilant in maintaining cost discipline. In this volatile environment, we will continue to seek growth opportunities in emerging markets and actively pursue more initiatives to grow revenue, improve market share and efficiency and above all control cost. Future growth will depend largely on consolidating Mauritius as the Hub. Being the National Carrier, the Company will ensure an efficient network of cargo services in order to promote trade, support local industries and also continue to contribute towards the economic development of the country. Passenger Sales and Distribution During the financial year 2014/2015, Air Mauritius operated to 20 destinations across 4 continents. Moreover, the Company also operated charter flights to Hahaya, Comoros and Chengdu, China. Air Mauritius injected around 2 million seats across the network, carried more than 1.4 million passengers. Overview of Routes & Markets Mauritius Mauritius market underperformed primarily due to the intense competition. Our main competitors increased seats capacity significantly and practiced price undercutting. Air Mauritius launched various promotional campaigns during the year to revamp the business and maintain its customer base. Despite the numerous challenges, the Mauritius market remains the number one market for Air Mauritius in terms of passengers and revenue generated as an area of sale. Europe Air Mauritius experienced strong growth in the European markets, attributable to the positive performance of offline markets during the financial year 2014/2015. Noteworthy increases were reported both in terms of the number of passengers and in revenue. On the other hand, online markets, Paris and London, showed signs of weakening. Air Mauritius operates direct flights to two destinations in Europe namely, Paris (CDG) and London (LHR). During the financial year 2014/2015, capacity was curtailed on the London route while uplifted passengers and revenue also followed a downward trend. The launch of flights by Thomson Airways (BY) further exacerbated the highly competitive environment where British Airways (BA) and Emirates (EK) were already competing for market share. On the other hand, the Paris route reported a modest growth in traffic albeit at a lower yield. Together with Joint Venture partner, Air France, Air Mauritius operated at least one daily frequency on the route. The beyond Paris (CDG) codeshare with Air France enable Air Mauritius to channel passengers to 37 points in Europe under the MK code. Australasia Australia The erosion of the Australian market has continued during 2014/2015 and capacity was further curtailed as compared to the previous year. The third frequency during IATA Northern Summer 2014 was cancelled in May/June/September and throughout Winter 2014/2015. India Air Mauritius serves four points in India Mumbai, Delhi, Bangalore and Chennai. A weekly combined flight is operated on the Mauritius/Bangalore/Chennai/ Mauritius route. Delhi is served with two weekly flights. Three weekly flights are operated on Mumbai with a fourth one during peak. While load factor was maintained on the India route, both capacity and passengers carried dropped. The India routes are under competitive pressure from the six-freedom carriers like Emirates (EK) and Air Seychelles (HM).

56 Annual Report 2014/15 I 53 Management Discussion and Analysis Passenger Sales and Distribution (Cont d) Overview of Routes & Markets (Cont d) Malaysia & Singapore Air Mauritius consolidated its operations on Kuala Lumpur (KUL). The aim was to develop this hub as a gateway for passengers to/from South-east/North-east Asia. During the year, Air Mauritius operated two direct weekly flights on KUL with a third flight via Singapore (SIN). Supplementary flights were also operated during peak of July/August Challenges were numerous on this market. For instance, the loss of two Malaysian Airline aircraft had a negative impact on the market. Hong Kong The Hong Kong market showed a steady performance. Revenue generated from Hong Kong as an area of sales continues to grow. On the other hand, the Hong Kong route is showing signs of downturn as passengers carried and revenue declined. China China moved to the fifth position in terms of tourist arrivals and has become one of the biggest markets in terms of revenue generation for Air Mauritius. All performance indicators show an improvement as compared to the previous year. During the year, Air Mauritius operated five weekly flights on China three weekly frequencies on Shanghai and twice weekly on Beijing. Charter flights were also operated to a third point in China, namely, Chengdu for the Chinese New Year Middle East Air Mauritius and Emirates codeshare on the trunk route between Mauritius and Dubai and on a few points beyond Dubai. Emirates operated twice daily A380 frequencies during the year. Passengers carried and revenue generated increased compared to the previous year. Africa South Africa The South African market did well amidst tough competition from South African Airways (SA) ten weekly frequencies and weekly BA Comair (MN) flight. Passengers and revenue grew compared to financial year 2013/2014. Since July 2014, Air Mauritius operated eight weekly frequencies on Johannesburg, including two weekend flights that were set up with more leisure friendly schedules. Three base flights were operated to Cape Town with modulations of the third flight during low season. For operational reasons, a stop in Durban was added to the direct flight from June to August. Durban was served by two weekly direct flights. Kenya The outspread of Ebola, terrorist attacks in Nairobi and the geopolitical strife in that region have impacted negatively on the market and the route. Two weekly frequencies were operated on Nairobi with a third flight during peak. Regional Reunion Reunion remains among the biggest markets in terms of passengers carried. Overall a good performance was noted on the route. Madagascar Madagascar route is heading in the right direction. During Winter 2014/2015, four weekly wide-bodied aircraft were deployed on the MRU/TNR/MRU route. The route indicators are positive and the Madagascar market has registered laudable passenger and revenue growth. Rodrigues The Rodrigues route performance has improved both in terms of passengers carried and revenue compared to last year. While flight loads were closely monitored and capacity adjusted as and when required, load factor on the route stabilized at around 93%. Sales from Rodrigues also displayed positive growth. Revenue Management During the financial year 2014/2015, Air Mauritius successfully stabilized its revenue and pricing process through ongoing revision in its pricing strategy and robust processes towards its inventory management. The wide acceptance of this process has enabled the materialization of the set objectives of revenue management. The need to strike a right balance between the often conflicting objectives of volume, yields and market share was a real challenge given the dynamic and competitive environment of the market. The focus was to mitigate any dramatic yield reduction while still targeting opportunities to increase volumes through pricing actions, where required. The aim was not only to respond actively to competitors actions but also seek any opportunity to stimulate load factor on poor flights by offering numerous specials throughout the year. This strategy had to be fine-tuned to cater for the specific needs of the Mauritius market.

57 54 I Management Discussion and Analysis Revenue Management (Cont d) During this year, Air Mauritius also harnessed the Codeshare Agreement with Emirates by offering fares to more than 100 destinations. As a result, Air Mauritius has been able to extend market exposure, especially to points where it does not operate. Renegotiation of this agreement in 2014 allowed additional flexibility to further optimize on the codeshare. Besides the Air Mauritius/Emirates Agreement, around 80 interline/codeshare agreements have been negotiated or renegotiated. RASK was also steered through a regular process of flight modulation. A new process of flight forecast by date has been implemented to identify such opportunities well in advance. Hence, modulations were brought primarily on Paris, Kuala Lumpur and India routes. This process also helped to maintain the yield at a reasonable level. Ancillary Revenue Ancillary revenues maintained an upward trend during 2014/2015, and are gradually contributing more to Air Mauritius revenue streams. The performance came as a result of the increased uptake from customers, following the marketing of the services and the introduction of the new facility to purchase in advance, not just at the airport. More customers have thus purchased ancillary upgrades, exit seats, and lounge access, and have demonstrated that, whilst keen on getting the best price for their tickets, they are still willing to spend on optional services for their comfort and a better travel experience. Competitive pressures, however, have put a strain on growth. Air Mauritius has provided additional free baggage allowance as a promotional offer to attract customers. Nonetheless, in order to maintain the revenues on a growth path, efforts will be made to further develop ancillary services, and attract more sales. Kestrelflyer The Kestrelflyer frequent flyer program registered a membership growth of 2% in the financial year 2014/2015. Air Mauritius pursued its strategy of building customer loyalty and service by introducing cards to all Kestrelflyer Red members. About 45,000 such cards were distributed during the year. A partnership with Cotton Bay Hotel was developed, allowing Kestrelflyer members to earn miles for their stay at the hotel. Through its partnership programmes, the sale of miles altogether generated additional revenue for the Company. During the year, Kestrelflyer members earned a host of privileges through their miles redemption. More than 3,500 free tickets were awarded. About 3,600 customers claimed upgrades and more than 2,000 excess luggage vouchers were issued. E-Commerce During the financial year 2014/2015, Air Mauritius consolidated its digital strategy, growing the online sales channel by 13%. The digital capabilities have been enhanced with the implementation of a number of initiatives and projects. Interesting growth has been observed in markets such as Reunion, United Kingdom, South Africa, China and Australia. Search Engine Optimisation Air Mauritius pursued its Search Engine Optimisation (SEO) initiatives to consistently stimulate traffic to our website. This has helped to achieve long term search engine ranking and positioning. Net improvement of ranking with new keywords has been observed. Air Mauritius website is now ranked better for French keywords and it is now on the first page of SERP Google.FR and position well among regional airlines. campaigns Regular e-newsletters on tactical promotions are sent to our customer database, creating more awareness and boosting online as well as offline sales. Various initiatives were taken to grow our customer database with frequent flyers, newsletter subscription and participation in social media campaigns. Mobile Channel Nowadays mobile bookings made on smartphones and tablets are becoming increasingly important for the travel industry. More and more website visits are coming through the mobile channel and contribute to online sales. The functionalities and services on our mobile website will be enhanced for our customers. Social Media The social media platforms present huge opportunities to create brand awareness and actively engage with our customers and drive revenues. Air Mauritius pursued its social media strategy during the year and a number of campaigns were run on our Facebook page to build the community by recruiting new fans. #AirMauritius360 o campaign was run from October 2014 to launch our Instagram account. The Company is now actively present on Facebook, Twitter, Instagram, Google+, YouTube as well as on Chinese Social Media platforms Weibo and WeChat.

58 Annual Report 2014/15 I 55 Management Discussion and Analysis E-Commerce (Cont d) Social Media (Cont d) On Facebook, the Company is actually the leading airline brand in Africa with over 690,000 fans, ranking 60th worldwide and has overtaken many well-known airline brands. Air Mauritius is the leading Mauritian brand on Facebook. Air Mauritius offers social customer service mainly on Twitter and Facebook responding to customer queries. Facebook posts and Twitter tweets on tactical offers create awareness and drive traffic to the website which contributes to sales. Our digital presence was established on another platform, the Made in Mauritius blog, which is uniquely positioned to promote destination Mauritius from the customer experiences perspective. Air Mauritius collaborates with a network of travel trade partners, hotels and attractions on the island to contribute to the rich, varied and trendy contents published in English and French. The blog site has attracted nearly 300,000 visits since its launch and has become a choice reference for the seasoned travellers. Information and Communication Technology As Facilitator and Enabler Information and Communication Technology (ICT) is inextricably linked with the airline business and Air Mauritius remains committed in adopting and harnessing of Information Systems. During the year 2014/2015, the Company has continued to bring further efficiencies through ICT in order to simplify the passenger journey, enhance customer service delivery, streamline business processes and empower its people through the use of enabling technologies. ICT Infrastructure In its on-going quest to improving the availability, security, scalability and cost-effectiveness of its information services, the Company s ICT infrastructure has evolved over the past year to cater for the growing needs of the various business units of the Company. This covered the upgrade of ageing servers and storage equipment to host new or upgraded applications and cater for database growth as well as the renewal of office automation equipment to improve staff productivity. The Company s IT security systems have also been reinforced to protect against external threats such as cyber-attacks, computer malware and spamming through the implementation of latest generation firewalls and Intrusion Protection Systems. These will also assist in the protection of the Company s internet facing sites and applications. Furthermore, the enhancement of systems in the Company s main Data Centre and Disaster Recovery (DR) site is an on-going process. The high availability and recovery capabilities of the Company s critical server and data storage systems has been strengthened through the implementation of replication and virtualisation technologies such as Microsoft Hyper-V Replica, clustering tools and additional Storage Area Network expansion devices. The upgrading of the Company s main networking platform that links all offices in Mauritius is also underway with the renewal of core network switches, routers and data cabling infrastructure which are reaching technological obsolescence. In addition, to increase the reliability and redundancy of Air Mauritius intra and inter building connectivity, the fibre-optic and wireless network backbone linking airport based offices will be upgraded. During the year 2014/2015, several systems covering Commercial, Finance, HR, Aircraft Maintenance & Engineering, Passenger and Cargo activities as well as airport operations have been implemented and enhanced. Enterprise Resource Management The use of the Enterprise and Resource Planning (ERP) systems has been enhanced to simplify several financial processes of the Company and cater for new business requirements. In this respect, customisations to the Oracle ERP system have been carried out to assist in the enablement of Electronic Fund Transfer to the Mauritius Commercial Bank to reduce printing and stationery cost and the implementation of dunning letters for improved debtor management. The HR system being the central repository for employee information is being continuously enhanced for quicker HR information processing and reporting. Several enhancements to this system have been carried out to accommodate new government regulations with respect to salary remuneration and to cater for changes in union agreements. Additional system capabilities to improve staff productivity have been implemented to assist the HR department in tracking contract expiries and retirements and in streamlining other HR administrative tasks. This HRIS and Payroll system has also been extended to the Air Mauritius Holidays subsidiary to allow for standardised processing of salaries and wages. Furthermore, the Verint Workforce Optimisation system which is used by the Company s Contact Centre for its daily operations has undergone a major upgrade to leverage on new technologies and functionalities in terms of agent scheduling, coaching, elearning as well as improved usability and web-enablement.

59 56 I Management Discussion and Analysis Information and Communication Technology As Facilitator and Enabler (Cont d) Passenger Commercial Systems Air Mauritius has pursued its strategy to generate additional revenue through the sale of ancillary services such as extra legroom seats, additional luggage, lounge access and upgrades. These facilities are displayed in the various Global Distributions Systems (GDS) worldwide to maximize sales through Travel agencies across markets. In order to enhance the travel experience of passengers, various interline Through-Check-In agreements have been implemented with other airlines to allow passengers having connecting flights to through check their luggage up to their final destination, thereby avoiding immigrations and baggage formalities during transit. Moreover, the system implementation of new codeshare agreements with other airlines such as Air India was put in place to better service the market through enhanced GDS exposure. The tracking of mishandled baggage has also been improved with the capture and automatic interface of passenger and baggage tag information between the Amadeus Departure Control System (DCS) and the airport s Baggage Reconciliation System (BRS). E-Services With a view to diversifying and exploring new channels to increase online revenues, flight related ancillary services such as exit seats, access to lounge or the carriage of ship models have been deployed on the Company s website and on its mobile channel. Following the partnership of Air Mauritius with leading meta fare search engines in Europe and China, the integration of these meta fare websites with the Company s booking engine has been carried out. This allows customers who search and plan for their flights on these well reputed websites to complete their bookings on the Company s website thus generating revenues to Air Mauritius. Furthermore, the security of the booking engine has been reinforced to block online transactions from invasive and unfriendly web robots. Moreover, several enhancements have been implemented on the online Tour Operating system within the Air Mauritius Holidays website so that this dynamic packaging platform can meet the requirements of customers who are looking for packages which combine flight and other travel components such as hotel, transfer and land activities. To further enhance customer service and experience, the Passenger Notification system has been fully deployed to all markets where passengers and station representatives are being notified by SMS and in case of flight disruptions. Customer Relationship Management Cognizant of the importance of the Company to provide quality customer service across all points of interaction, the Siebel Customer Relationship Management (CRM) system has to be regularly enhanced to assist in promoting customer engagement and loyalty. In this respect, new business and user requirements have led to the development of new functionalities for the Company s Frequent Flyer programme. New enhancements to this system now allow Air Mauritius Kestrelflyer members to earn miles when they stay at Indigo Hotels and at Cotton Bay Hotel in Rodrigues. In addition, following the new joint venture agreement with Air France, further changes were done on the application to allow the earning of miles when Kestrelflyer members travel on the regional airline A5 (Hop!) which is a subsidiary of Air France. Passenger and Cargo Revenue Accounting Systems The RAPID Passenger and Cargo Revenue Accounting systems have been upgraded to the latest platform in May The enhancements to the Passenger revenue system include optimised and simplified processes such as fuel surcharge computation, allocation and reconciliation, improved inward billing workflows, advanced codeshare capabilities to reduce manual filing, enhanced tax differentiation, reconciliation and write back and new dashboards to facilitate monitoring of flown revenue, sales and inward billings. Similarly, the new capabilities brought by the latest version of the Cargo Revenue Accounting application encompass the tracking of receivables and process settlements, the automatic proration of other charges and dash-boarding features to enable the monitoring of key cargo metrics. The Cargo Revenue Accounting system also handles the processing of accounting documents for the mail business i.e. the carriage of parcels on behalf of postal administrations across the world. In addition, an in-house developed solution has been designed and implemented for the management of disputes and accurate rebilling. The existing cargo dashboards have also been enhanced to allow a better analysis of the performance of the Cargo business.

60 Annual Report 2014/15 I 57 Management Discussion and Analysis Information and Communication Technology As Facilitator and Enabler (Cont d) Aircraft and Flight Operations Systems The maintenance and upgrade of the applications used by the Technical Services and Flight Operations departments is an important on-going process. To improve operational efficiency related to aircraft monitoring and maintenance activities, the Airbus AirN@v and AJCP systems have recently been upgraded and migrated to the latest web technology platform to enable better online consultation of Airbus technical data. This incorporates all principal technical manuals and enables simplified timely distribution of information relevant for troubleshooting. A web based system used by the Maintenance Control Centre to integrate information from various systems to make the monitoring of technical status of aircraft more efficient has been deployed to various Outstations in a phased approach. This system assists in the assessment of aircraft dispatch reliability performance, technical delays and AOG for corrective actions. The Company has deployed the SITA Flight-Monitor solution for the flight tracking and monitoring of its Airbus fleet in response to regulatory requirements. This software which combines aircraft tracking with global weather information provides flight planners and flight dispatcher access to timely flight related forecast information in order to make informed decisions. Furthermore, the VISIUM Fuel Management system has been fine-tuned to assist the Company in optimising its operational fuel usage. Several system upgrades are also in the pipeline or under study. This encompasses the migration of the current Sabre Rocade system to an integrated suite of applications to enhance the management and utilisation of the Company s crew and aircraft resources, the upgrade of the Maintenix Maintenance & Engineering system to the latest version to cater for new user requirements such as dispatch reliability reporting or the upgrade of the Flight Safety Management system VISIUM AQD to the latest platform as this will contribute to compliance with Enhanced IOSA (eiosa) Edition 8 Audit. Cargo Reservations and Operations Systems The Cargo Spot integrated cargo reservations and operations system has been upgraded to the latest release in December The new features will assist in improving freight operation activities such as stock management, booking, pricing, documentation and airport handling. In order to bring further efficiency to the cargo logistics cycle and reduce data capture errors, the interface of Airway bill and ad-hoc rate data between the Cargo Spot and the RAPID Cargo Revenue Accounting System has been carried out. Likewise, a Cargo tracking facility using SMS was developed to allow customers get real time information on the status of their shipments. The Company s Cargo Track N Trace functionality has also been enhanced to produce more precise information to customers, especially when shipments are split on multiple flights. Business Intelligence and Collaboration Systems During the year 2014/2015, Air Mauritius has pursued its objective of harnessing information from multiple data sources and distributing it to users in a multidimensional and user friendly manner for better decision making purposes. The development and roll out of new Business Intelligence (BI) systems such as flight punctuality charts, passenger revenue analysis, sales budget-actuals variance by area of sales or Joint Venture data analysis and reporting has been carried out to meet the needs of several departments. Microsoft SharePoint collaboration platform is now commonly adopted and used across the organisation. Its various features such as content management, portal, workflows, business process integration and dashboarding are used to enhance user productivity, knowledge sharing and engage people in a more efficient way. New developments on this platform have been carried out to facilitate communication such as organised familiarisation trips between the Commercial Department, Outstations and business partners. Also, a cash management system for the Treasury Department has been deployed to allow a timely and accurate reporting of the cash position of the Company. Several collaborative systems have also been enhanced to cater for new business needs such as the Read & Sign system for mandatory Airworthiness Directives and Service Bulletins used by Technical Services or the Ground Operations portal used to support the ISAGO audit requirements. Flight Operations And Flight Safety Air Mauritius holds an Aircraft Operator s Certificate (AOC) issued by the Department of Civil Aviation (DCA) of the Republic of Mauritius in order to qualify for Commercial Air Transport Operators. To achieve this AOC the Company must demonstrate that it can comply with International Civil Aviation Organization (ICAO) standards which are set in the Civil Aviation Regulations of Mauritius.

61 58 I Management Discussion and Analysis Flight Operations And Flight Safety (Cont d) Since Safety of our Customers remains the prime objective, Air Mauritius strives for continuous improvement, setting standards well above minimum compliance levels. The Department of Civil Aviation carries out oversight of all aspects of our operation to verify continued compliance has been achieved, and safety standards remain high. Air Mauritius also achieved an IATA Operational Safety Audit (IOSA) Certificate having been recertified in September The Flight Operations Support team is headed by the Executive Vice President Flight Operations as the AOC Nominated Person for Flight Operations and a management team comprising of Management Pilots and Operations Managers. The Flight Operations Support team, managed by another AOC nominated person, is responsible to provide the logistical backup for operations to all destination and alternate airports where the Company operates. The team also ensures that the relevant permits and approvals have been obtained from the different countries that the Company overflies while keeping accurate and update documentation, manuals and procedures. Crew Training is organized and carried out under the aegis of the Chief Training Captain, AOC Nominated Person for Training, and his team. Air Mauritius holds approvals from the DCA to conduct initial type rating courses, recurrent simulator training and ground courses, also specialist training courses such as low visibility operations and extended twin engine operations (ETOPs). Training is conducted throughout the year to ensure both flight crew and cabin crew meet the mandatory requirements but also to improve standards, share industry best practice and provide continuous feedback on performance. Human factors and safety management systems training are also included in the syllabus. The Operations Control Center (OCC) is the nerve center for Aircraft Operations where all flights are monitored and situations managed. OCC oversees the network and provides control when unforeseen circumstances conspire to alter the planned operations. The primary aim is to minimize disruption, ensuring that our customers reach their destination safely in any given circumstance. OCC also manages the day to day functions of flight dispatch, flight planning, and crew control, working closely with colleagues in Technical Services. One very important role is Flight Following where automatic updates are received regularly of the aircraft position. Controlling costs is an important objective for any business, the Fuel Office focuses its efforts on fuel conservation initiatives for all areas of the Company. The Company uses a number of planning tools to optimize and reduce the amount of fuel burnt. Dynamic flight planning, negotiating optimum routings and cruising levels, improved, precise load information all contribute to accurately calculating the amount of fuel to be carried, thus minimizing excess. During 2014 approval from the DCA for ETOPS beyond 180 minutes was received. This has meant more direct routing to Perth across the Southern Indian Ocean thus, contributing to more significant savings. The Flight and Cabin Operations teams have contributed to the specification requirements during the fleet renewal exercise and the project team will work on the implementation for the introduction into service of the new fleet in Flight Operations cannot function without the cooperation of other departments. As safety is our first priority, cooperation with the Safety Department is essential. Promoting an open reporting culture is at the heart of a Safety Management System so there is close liaison between the two areas. Customer experience is also paramount so services improvements are coordinated, managed and rolled out in a joined-up way across the Company. Technical Services Located at the SSR International Airport Mauritius, Technical Services (TS) has the responsibility to ensure the continued airworthiness of aircraft in its fleet. It also provides maintenance and engineering services to other airlines transiting Mauritius and the Maritime Air Squadron of the National Coast Guard. Technical Services has the added responsibility of providing full technical assistance for its airplanes throughout its network. Its Maintenance Control Centre performs continuous technical follow-up of the fleet and provides technical support on a twenty four hour basis. Maintenance personnel are regularly positioned in Rodrigues, Reunion and Madagascar to provide an enhanced level of service especially during peak periods. Technical Services has set up a dedicated Line Maintenance Office in the New Terminal Building to cater for the growing operations and further improve the level of service provided to its stakeholders. Moreover, the new Rodrigues (RRG) line station is operational since December 2014 in a view to improve maintenance and support of operations at Rodrigues.

62 Annual Report 2014/15 I 59 Management Discussion and Analysis Technical Services (Cont d) The core capabilities of Technical Services are focused on Airbus A340, A330, A319 and ATR 72 aircraft types. In addition it has developed line maintenance capabilities for Boeing aircraft. With its strong team of highly skilled and committed workforce, Technical Services has consistently provided the highest quality of services to the airline and its customers. This Business Unit is approved to operate both under the European Aviation Safety Agency standards and Mauritius Civil Aviation requirements. The Unit is approved by the Mauritius Civil Aviation as MCAR Part 147 training organization to conduct aircraft type training. Manual and procedures updates are on-going to be in line with changes in Mauritius Civil Aviation requirements. As further commitment to international standards, Technical Services has maintained its IOSA certification status since Technical Services acknowledges the importance that training plays in maintaining the continued airworthiness of its aircraft and in line with its strategy to further unleash the full potential of its people, the Business Unit has invested massively in continuous training and development programs both in Mauritius and overseas. Over 190 training sessions were conducted in-house by the Technical Training Center. Technical Services has continued to increase the competencies of its staff. All Maintenance Engineers license holders have undergone required training and their licenses have been successfully converted to the MCAR Part 66 License. The Introduction to Safety Management System (SMS) training which was initiated in May 2014 has been successfully completed. Technical Services is also engaged in the initiative to maintain the aircraft cabin to a Skytrax 4 star standard. During the financial year, a maintenance program has been implemented to ensure consistency and improvement of reliability and quality level. Several actions have been taken to enhance the passenger comfort and experience. In addition to the maintenance actions performed in Mauritius, a more comprehensive work is being done on the cabin and Inflight Entertainment (IFE) system during some layovers in Maintenance Repair Organisations (MROs). Inherent to the nature of the Company s operations, Technical Services deals with a lot of hazardous waste and by law these toxic waste are to be disposed in a responsible manner so as to protect both human health and the environment. To this effect, the Company is proud to be among the first Companies in Mauritius to dispose these hazardous materials as per the Basel Convention. Human Resources The Human Resources Department continues to strive to adapt to the Company s strategic objectives. The focus is on the development of human capital on the creation of a work environment that is conducive to the performance and personal development of employees. The Company s talent management strategy aims at encouraging its team members to deliver high performance that is aligned with their key responsibilities and accountabilities and to demonstrate behaviors that are consistent with the Company s values. a) Learning and Development Faced with new challenges and in order to ensure that its people are adequately equipped with the required competencies and prepared for growth, the Company is continuously committed to invest in the learning and development of its team members. Thus, staff is encouraged to take training courses that will help them achieve their training and development goals which in turn provide the Company with a highly skilled workforce. The Company does not make any compromise with regards to regulatory standards and safety and, as such, on-going yearly investment in regulatory and mandatory training is effected in areas such as Cabin Operations, Flight Operations, Technical Operations, and Ground Operations to ensure that team members meet the required standards in the industry. In order to build team members capability, beyond Mandatory and Technical Training, targeted learning and development programmes have also been delivered. A total of 3,223.5 hours of training has been delivered during the financial year 2014/2015 for a total of 1,766 team members, excluding training hours for pilots and recurrent/technical training (EPT/RST/TS). The Human Resources Department also organised in 2014, a Supervisory Development Programme for 100 team members having supervisory functions in the Company. This Supervisory Development Programme named RISE Above (Raise and Inspire Supervisors towards Excellence) based on the Hemsley Fraser Leadership and Management Programme, was customised to meet team members specific development needs.

63 60 I Management Discussion and Analysis Human Resources (Cont d) b) Corporate Grooming and Image Management In order to further improve service quality, a Service Improvement Project was launched to take the next Step Up initiative with regards to Image Management and Grooming for all team members. Accordingly Image Management and Corporate Grooming Training Workshops had been launched from September 2014 to March 2015 and were delivered by trainers from a Singapore based Company specialised in the field, a total of 1,075 team members have benefitted from this training and the Company plans to continue with the training in the new financial year with particular focus on front line team members. c) Mauritianisation of Cockpit Crew Following the three recruitment and selection programmes launched in 2013 to give Mauritian Nationals the opportunity to pursue a career as airline Pilots with the Company, five selected candidates successfully completed their training during this financial year and they have joined the Company s ATR fleet. In addition, ten candidates selected under the Mauritian Cadet Pilot Programme are currently following the Advanced Integrated Airline Pilot License course with 4 3 Air School, a Specialised Training School in South Africa. A next batch is planned to start in August d) Health & Safety Air Mauritius is committed to providing a healthy, safe and secure working environment for all its employees. In its endeavour to continuously prove itself a safe airline for travel in the eyes of its valued customers, the Company has demonstrated its commitment to achieve and maintain Safety, Health & Environmental (SHE) Standards as an integral part of its business plan. Promoting Safety, Health & Environment has retained Management s interest to ensure it really translates its duty of care towards its employees safety and wellbeing as well as protecting the community against environmental damages. e) Employee Relations Good employment relations are the joint responsibility of Management and workers and the trade unions. In this context, to promote and maintain a harmonious employment relations climate in the Company, Management maintained during the year regular consultation with all the recognised unions in the Company. Customer Experience, Ground & Inflight Services Our Customer Experience strategy is to consistently delight our customers by providing a unique travel experience in genuine Mauritian style. As from 2012, the Company focused on the collective efforts to bring a major stepping up of our core product and service delivery by aiming for the 4-Star Airline Rating by Skytrax in Air Mauritius structured and triggered a robust program in October 2012 for identifying gaps, prioritising actions and implementing change in a phased and costeffective manner for Onboard and Airport areas. Air Mauritius delivered on the promise and on 08 July 2014, the Company was awarded the prestigious 4-Star Airline Rating, bearing testimony to improvements in our product and service delivery. Air Mauritius was also recognized by Skytrax as follows: Runner up in the Best Airline in Africa Runner up in Best Airline Service in Africa (Ground & Inflight) Top 10 Most Improved Airlines in the World Highlights of actions triggered since 2012 and culminating towards full implementation in the financial year 2014/2015 are as follows: a) Stepping Up the Onboard experience A stepped up and branded Business Class Amenity Kit; Improved Business Class Pillow and Blanket; New Business Class toiletries; Economy Class Pillow and Blanket; New Economy Class Amenity Kit; Baby and Children customer segments have been given a special attention with New Amenities which target those age groups, for a delightful travel experience by the parents. Air Mauritius was among the 6 Best in the 2014 Airline Amenity Bag Awards in the World;

64 Annual Report 2014/15 I 61 Management Discussion and Analysis Customer Experience, Ground & Inflight Services (Cont d) a) Stepping Up the Onboard experience (Cont d) A refreshed cabin with new Seat Covers and New Carpets; Innovative Boarding Video in lieu of boarding music; Complete review of our Inflight Entertainment offering with customised IFE contents has resulted in tripled offer on AVOD aircraft, doubled on Non Avod aircraft, and games offering increased by 70%; Separate Inflight Entertainment Guides for Audio Video On Demand ( AVOD ) and non-avod aircraft; Implementation of Digital Video Players (DVP) on non-avod aircraft have further improved the quality of sound and image onboard, replacing the previous Video Cassette Players; Introduction of a new inflight safety video, with an innovative approach to convey important safety messages whilst showing beautiful scenes of Mauritius; Enhanced quantity and variety of newspapers and magazines onboard; Complete review of Inflight Duty Free Sales (IDFS) offering towards a sustainable quality service attribute; Selection of our Wines and Champagne offering has been renewed and implemented with the support of our Sommelier Consultant. Pre-selected wines, with a 4th Rank for our Chablis Saint Martin in the Cellars in the Sky Awards 2014, and our champagne Duval Leroy fleur de champagne brut won the Sakura Japan Women s Wine Awards 2015; Beverage offering in our Air Mauritius Lounge in Mauritius has been aligned with the onboard offering, which provides a unique experience for our customers, on ground and inflight. It is a quintessence of our Mauritianness. In addition to handling its own flights, Air Mauritius provides ground handling services to other airlines as well. These services which include passenger, baggage, ramp, cargo and cleaning services, aim at offering effective and efficient services with commitment to optimal satisfaction. The latest technology aircraft like A380, B787 and B777 from our customers are handled regularly by Air Mauritius. During financial year 2014/2015, Air Mauritius has served ground services to more than 13,250 flights to 2,140,000 passengers at high international standards. The technical development of handling equipment as well as the evolution in aviation regulations generates a permanent need for training. Our recurrent training program prepares our team members with the skills necessary to perform their jobs efficiently and with confidence from day one, helping to increase employee skill levels and improve safety as well as meeting every customer requirements. During the year, Air Mauritius received the IATA Safety Audit for Ground Operations (ISAGO) certification for adhering to high safety standards at the Sir Seewoosagur Ramgoolam International Airport. The service delivery standards are maintained through regular audits which have validated our status of IATA Operational Safety Audit (IOSA) and ISO 9001:2008. Recognition from these respected institutions confirms that the safety and quality management system in place are of international standards. The Inflight Beverage offering has been reviewed and improved in both classes. b) Stepping Up the Airport experience Premium check-in counter and Priority boarding; Concierge service for premium passengers with Gold Card travelling Business Class (Departing from Mauritius); Menu offering in our Amédée Maingard Lounge in Mauritius has completely been reviewed and customised for different customer profiles and Airline customers; Air Mauritius has been voted Indian Ocean s Leading Airline for the 10 th year, reflecting our determination to offer the very best service to our customers. The World Travel Awards are voted for by members of the public based on their own experience. Our Lounge was also voted Indian Ocean s Leading Airline Lounge at the 2014 World Travel Awards.