With Air Mauritius declaring voluntary administration last week, Weekly speaks to Raj Ramlugun, secretary of the Listed Companies Minorities Shareholders’ Association, for his views on the troubled airline. He gives his opinion on the underlying causes of the company’s strife, including political interference, and offers solutions to help pull it out of the doldrums in the post-Covid era.
Mauritius was shocked to hear about Air Mauritius going into voluntary administration. Were you?
More than shocked. It’s a feeling of immense sadness and one of indignation. Sadness because MK as the national carrier is the pride of all Mauritians and, for me, in particular, as an ex-employee, this news is like a long-dreaded nightmare come true. More so for its over 2,000 employees who are suddenly distraught by seeing their very livelihood and lives suddenly come to a grinding halt. With the coming on the scene of the voluntary administration, there is a sense of deeper uncertainty and anxiety around.
For years you have been sounding the alarm about the flaws in the culture of governance and leadership at MK. But what seems to have brought the company to a halt is something you couldn’t foresee, could you?
Covid-19 was only the final blow dealt to MK. True, that couldn’t be foreseen but the collective failure in nurturing a culture of resilience and constant state of preparedness in normal times has certainly precipitated the crash landing. What the coronavirus actually did was strip naked the vulnerability of MK and the lack of aligned focus on the dashboard so as to keep the plane always on course safely. It would be outright dishonest and outrageous, even criminal, to use Covid-19 as an alibi for all the costly trial and error strategies and decision-making at various levels, chronic leadership and governance/accountability failures at board and management levels. The pernicious and devastating impact of rampant political interference and internal lobbies, including self-serving unionists imposing their agendas, has been rife under all governments, without fail, but at varying degrees, with a never-ending total sense of impunity!
Things being what they are, do you think putting MK under voluntary administration is the best option?
I believe there is a clear sense of urgency to save the company and the least damageable way to do so at this critical juncture is by putting it under voluntary administration. I will not get into the debate about whether the choice of the voluntary administrator is tainted with conflict of interest or not.
Are you saying it’s not important that the administrator is conflicted or is very close to the government?
He might be. But I shall probably surprise you by playing it very pragmatic in this life-and-death situation for MK. What are the real issues for all those who are directly concerned today? (1) Rescuing the company, and (2) Saving jobs. Now, if the government has taken the decision to appoint the administrator on the basis of subjective criteria but through a sense of mutual trust that can help ensure those two mentioned objectives are attained as far as possible, do you think the employees or other directly concerned stakeholders will take issue with that? I personally don’t think so. There are speculations rife about hidden agendas and other plans looming. I have not seen any such proof yet. So I will not venture into the realm of speculations at this stage. What we should be doing (both from inside the company and outside) as the exercise progresses is to remain constantly on high alert and pre-empt any action that might be foreseen as detrimental to the survival of the national airline, its employees and other stakeholders. I continue to believe that MK is too big and important for the country and the politicians in power (of any regime) to allow it to fail.
If there is no money to save it, there is no money. How can you avoid its failure?
MK’s failure and extinction as a national airline would sound the death knell for those in power. Unless the situation as a result of the pandemic becomes really untenable and unsustainable financially both for the state and MK.
Knowing what we know today of the government’s hand over every institution, do you think it will inject money into MK and keep its hands off it?
If, in the process of salvaging the company financially amidst the unprecedented crisis, it can sanitise MK’s complacency and extravagant culture, that would be a real blessing in disguise in the long run. With the surgical reflex that administrators usually have when undertaking such tasks in order to keep a concern going while meeting short-term obligations, we should expect some very deep and drastic action. The government will need to be a very strong and reliable ally in that exercise to keep MK as our national airline. If, on the other hand, it keeps perpetuating the hitherto rotten and self-serving business-as-usual model, then MK will not survive.
Talk about the Air Corridor came up as soon as the announcement was made. To what extent did this decision contribute to the downfall of Air Mauritius?
The Air Corridor is another case in point of unwarranted political intervention. But who bears the cost of all these fiascos at the end of the day? Who is held accountable? Where are those who were sponsoring and selling the idea as a great marketing feat? Have they lost a cent in this ‘adventurous’ venture? Given that sometimes highly technical and strategic decisions are taken and imposed on MK from outside by non-aviation people (like for route/network, Open Sky, aircraft choice and purchase etc), my concern is this: what is the input of the board and management during such decision-making exercises? As custodians at board and management levels, have they always done their best to serve and protect the highest interests of MK and the country, or have they been content foremost to serve themselves and their own interests? Are they forced to be mere rubber stamps or they are willing to play that role, knowing they won’t have to bear any personal consequences at the end of the day? If they are compelled to implement a decision that they consider to be detrimental to MK’s interests, is that concern recorded in the minutes of proceedings of the official board meeting?
Wasn’t it Megh Pillay who was CEO of Air Mauritius when the notorious Air Corridor was launched with much pomp and ceremony?
Megh Pillay joined MK on 15 March 2016. It is clear that the project had been under serious consideration since 2015 with the full backing of then Deputy Prime Minister and Minister of Tourism Xavier Duval. He even headed, with all glamour and excitement, a delegation consisting of multiple high-profile stakeholders from Mauritius to Changi Singapore on 14 March 2016. i.e. before the arrival of Pillay. It is clear that the decision for the Air Corridor was already made before Pillay’s arrival. It is true, however, that shortly after his arrival, he was optimistic about the potential of the traffic expansion that the Air Corridor project entailed.
Isn’t optimistic an understatement? He was even saying that the flights to Guangdong were full and that “if this tendency continues, there will be a second flight put in place.” Is he one of those you are blaming?
Knowing how things are and personal survival remains very important for all leaders appointed by governments, do you think he would have dared question the project? If he hasn’t voiced out then though he knew it, he has somewhere compromised the interests on the company and probably his integrity. That’s a question that needs to be put to him and for which he must answer for the sake of enlightening the public. I cannot play the sole advocate for all the wrongs at MK all the time. Others who have been at the helm and have earned millions to manage and lead should dare speak out in the highest interests of the company and those of the country. The bottom line is that decisions with huge financial and collateral impacts are shrouded in opacity. Do we have the records or minutes of proceedings to show how the decision was taken and who defended MK’s interests in the process? Who bears the brunt at the end of the day? Is it not that same adventurous mentality and immunity from public accountability that has permeated the DNA of our governance culture almost everywhere for decades? And how many of those who are stealing headlines to grieve over MK’s woes are nothing but hypocrites and accomplices in the crash of MK today?
Are you saying that had the right decisions been taken at the right time, MK would have survived Covid-19?
If the right decision had been taken at the right time, MK today would have had a bit more breathing space to plan the rescue operation. The crash would not have been that brutal and traumatising. To protect the company from the costly reckless decisions of its internal and external stakeholders from management’s and board members’, I really think that the law should be amended so that all state entities where the government is a majority shareholder, so that a copy of ALL the minutes of proceedings of board meetings duly signed should be filed with the Registrar of Companies and be available for inspection or scrutiny at any time.
Some people believe MK will rise out of its ashes. Do you?
It’s hard to foresee how and when it will really bounce back. But, considering the deep love I have for our national airline and the concerns I have for the thousands of MK employees and MK subsidiaries, I want this company to be saved. But not along the same culture of entitlement, self-serving agendas and poor governance ethics that have contributed to undermining its very survival.
What do you think should be done concretely?
First and foremost, stopping the politicisation of MK while it’s fighting for survival in the Intensive Care Unit. Uniting all our efforts, resources, intelligence and genuine patriotism to lift MK out and give it sustenance to fly again beyond our differences and party politics. It’s very much for all of us to make this effort, but mainly for the government to establish a climate of mutual trust based on truth and transparency on all the issues.
Beyond romanticism, what Air Mauritius needs right now is money. Where do you think it should come from? The government or a private buyer?
No magic wand. First, we must remind ourselves that the real captain of the whole Planet Earth Vessel today is Covid-19. MK, like other concerns fighting for survival in the ICU, needs just to buy time until hopefully the virus gives us a permanent respite and economic activities can get back to normal. Right now, there are enormous cost savings and sacrifices that will have to be made by everyone at MK. There are various ways to do so. But it’s very important to save jobs while ensuring the much-needed sanitisation takes place from the very top to offload all excess baggage and parasites/sinecures sucking the blood out of the organisation. How much savings in monetary terms will all these internal actions bring within this very short-term period to bail out MK? Not enough in my view, even over six months or one year. MK is currently far more vulnerable and exposed financially than that. But the positive point is that it has a good credibility vis à vis banks and financing institutions. Its relatively small size might give it more manoeuvrability in the current context. The negotiating skills of the administrators with creditors and other partners in favour of MK will be crucial to extend the lifeline. But the bulk of the bail out should come from the government through various forms and by inviting the other shareholders of MK (Air France, Air India and ENL) to contribute towards that initiative. Our diplomacy should also help secure a reasonable rescue assistance from countries that have good ties with Mauritius like France, Germany, China, India or UK. The real challenge for the long-term survival of MK will ultimately rest on the depth and duration of the pandemic. We should not underplay that dimension. What we should be monitoring carefully as the operations unfold and progress to bail out MK and make it more efficient is how MK keeps its status as a national airline without the state surrendering its control over the company. Yes, there is some romanticism in my relationship and narrative about MK. It’s born more out of a strong emotional bond based on a deep sense of gratitude I owe MK for what it has offered me and many who work for it with pride and dedication.
Whatever plan is opted for, won’t it entail trimming the staff and getting rid of the board of directors?
I have no doubt it will entail some sort of trimming of staff. How they will go about it is quite a complex matter and time is not so much of an ally at the moment. Though I am all for MK being more efficient and ensuring that all its structures and resource allocations are based on the organisational and business needs and not the other way around, I would not welcome trimming in the form of people losing their jobs. The government should ensure this is really the very last resort, especially as the situation is already very harsh outside. If ever that trimming plan is effective, I believe it could be through some kind of Voluntary Retirement Scheme (VRS). MK has had such schemes in place but paradoxically, it also kept replacing those who were going on the VRS. It defeated the whole purpose of the exercise. I personally would have suggested that all higher management personnel (may be even middle management) should be placed on fixed-term contracts, with performance related remuneration/benefits as in some other big companies. There could also be some merging in different management structures to make it leaner and more effective.
Board members seem to be swallowing a good chunk of MK’s budget, particularly with bizarre benefits like free tickets for life. Do you think that should also go?
I think there should be a renegotiation of board members’ salary and benefits. No more abuses and lifetime privileges for any part-time appointees and relatives on the board. Also, they should be appointed on a combination of competence, integrity and sense of independence. At least if those ideal candidates are not easily available, the prime minister should not condone appointment of people that can easily be recognised as solely party loyalists, on the basis of party loyalty and being self-serving. If the prime minister wants to send the right signal, not only concerning MK but in all other government-related entities, he should dare go for a clean sweep in terms of the quality, ethics and competence of people who should be at the helm of the board/s. However, this all depends on his own values, vision and agenda for MK.
There are mixed feelings about MK’s plight. How do you react to that?
My appeal to the public is to remember that the majority of those employees at MK have always done their duty with utmost diligence. They deserve our appreciation and solidarity in these difficult times. The post=Covid-19 Air Mauritius, when it rises from the ashes, must be a more sanitised one in terms of leadership, governance values, discipline and work ethics at all levels. If that paradigm shift has not occurred at MK, then all the employees collectively would be held complicit in the disappearance of our beloved airline from the sky for good.