Air Mauritius posted a first-half pre-tax loss of EUR€18.3 million on Saturday versus a EUR€6.3 million loss a year earlier, blaming heavy fuel costs and exchange rate volatility.
Andre Viljoen, Air Mauritius' CEO told a news conference the airline's additional fuel bill for the first six months to September 30 was of the order of EUR€24.8 million.
He said accounts were also impacted by the volatility in exchange rates mainly between the euro and dollar.
However, Viljoen said in spite of the adverse conditions the company saw a growth in passenger numbers in the first half to the tune of 3.8 percent.
"These numbers, unfortunately, were obtained at the expense of yield which came under pressure as a result of the market conditions as well as the intense competitive pressures for Mauritius as a destination and between airlines operating to Mauritius," he said.
The airline said it was maintaining its capacity deployment for the year to pursue its growth objectives, protect its market share and support the tourism industry.
Last July, the national airline started direct flights to China in a move to boost tourism in the island, which is suffering from the economic downturn in Europe.
Tourism typically generates about 10 percent of gross domestic product for Mauritius' USD$11 billion economy. European tourists account for some two-thirds of arrivals.
"While the shift in growth over the last two years towards emerging markets such as India, China, South Africa and Australia is reaping rewards, they remain small in relation to the European market," Viljoen said.
The government said tourist arrivals in October rose 3.8 percent helped by a surge of 161 percent of visitors from China.
Mauritius is a popular leisure destination, famed for its azure seas, white beaches and luxury spas.
Air Mauritius said it has begun to review its business model so as to cope not only with the recession in the airline industry, but also with the downturn in the Mauritian tourism sector as a whole.
"Even though it is facing challenges it has never encountered before, the airline is maintaining all its flights, while stepping up its efforts on all markets and strengthening its partnerships, it said.