It has now been confirmed that Air Mauritius will continue to pay US4105 dollars per barrel of oil until 2010 even though the price on the world market has dropped to 35 dollars per barrel all.
The reason? The airline negotiated a guarantee for a price stability when the price of fuel was on the rise. The Mauritian national airline is now set to lose over US$250 million during the next 24 months period.
In August lat year, the management of Air Mauritius negotiated a guarantee for their fuel price to expire only in 2010. This is an accepted formula adopted by airlines to mitigate against increases in fuel prices, but success is not always achieved.
The Air Mauritius deal was signed as the fuel prices were reaching US$125 per barrel, but after the climax in prices to US$147 in July the prices have nose-dove and Air Mauritius has been caught out.
Sources close to Air Mauritius have confirmed that the use approximately 20,000 tons per month or 150,000 barrels. At today’s prices this provides for a loss of US$10.5 million dollars per month or US$250 million.