Managing Director of Island Aviation Services Limited (IASL) Mohamed Rizvee has said the company will not follow suit of Air Maldives regardless of its low return in the second quarter. Rizvee made the comments in response to public criticism due to national flag carrier's high expenses regardless of its low return in the second quarter this year.
The quarterly review of IASL publicised by Privatisation and Corporatisation Board (PCB) revealed the revenues generated in the second quarter decreased by 15%, compared to its revenues in the first quarter. IASL generated USD 29 million in revenues in the second quarter while it reported a revenue of USD 35 million.
The criticism arose after statistics revealed the company made a whopping USD 695,793 in losses, while a significant USD 4.4 million was made in profits.
Justifying the loss, Rizvee said the second quarter usually generates a loss to the company. Rizvee further said 2018 saw a loss of USD 5 million US dollars. He said the company generates a loss in the second quarter due to a decrease in the number of travellers during Ramadan. He said the decision to reduce fare prices also contributed to the loss, with discounting USD 5.4 million in fare price. The expenses rose to USD 9.3 million this year with recurrent expenses in employee wages and allowances primarily causing significant loss to the company.
Speaking to press, Rizvee said former national flag carrier, Air Maldives, and other companies such as Maldives National Shipping Limited (MNSL) went bankrupt due to conflict of interest, greed and mismanagement while IASL suffered a loss only in the second quarter this year. He assured the company would generate profits in the coming quarters assuring that the company will not follow suit of Air Maldives into bankruptcy. He further said IASL has established sound internal controls in reporting.
Rizvee further said the company is operating at a profit of USD 453,075 and the 3rd quarter will generate profits to the company as it is the travel season. He also hoped the introduction of flights to new destinations would impact positively towards profits.
Air Maldives was a state-owned enterprise that began operations in 1974 and after operating for about 26 years, the airline declared bankruptcy and stopped all operations in 2000, with losses estimated at USD 70 million.
The same year, a new national flag carrier, Maldivian, was formed and eventually expanding to 8 international destinations.