Island Aviation, the parent company of national carrier Maldivian, has incurred a major loss in the first yearly quarter.
According to the Quarterly Review of state-owned enterprises published by the Privatization and Corporatization Board (PCB), Island Aviation incurred a loss of MVR 25.3 million in the first yearly quarter. The company’s losses in the last three months of 2020 totaled MVR 54.1 million.
Company on the verge of bankruptcy?
PCB’s review shows that Maldivian’s finances are unfavorable. By the end of the first quarter, Island Aviation accumulated MVR 1.1 billion in debt. This includes fuel and fees for planes from abroad. The company has been facing difficulties in paying its dues.
PCB observed that Island Aviation did not have adequate finances to repay current liabilities by the end of the first quarter. Island Aviation obtained an MVR 69.3 million bank loan to settle expenses.
PCB has advised the company to keep its operating expenses at an optimum level. Island Aviation’s largest expense is the salaries and benefits of its employees. The company reportedly spent MVR 36 million per month on salaries and benefits. However, salaries were reduced due to COVID-19 and the company now spends MVR 23 million on salaries and benefits.
It is noteworthy that Maldivian’s finances were plummeting long before COVID-19. Former Operations Director Captain Mohamed Ameen stated that company operations were hindered after experts were pushed aside by the new government’s changes to the company’s executives.
Some executives were appointed to high positions with minimal responsibilities through their connection to the ruling Maldives Democratic Party.