SriLankan Airlines Continues To Descend
Rajeewa Jayaweera
The national carrier SriLankan Airlines recently held its Thirty Ninth Annual General Meeting (AGM) of the Shareholders last Monday at the Auditorium of The Institute of Chartered Accountants of Sri Lanka at Malalasekera Mawatha in Colombo 7. It was presided by Chairman Ajith Dias and attended by six of seven remaining directors. One director had resigned recently. It was well attended by many former and current employee shareholders, anxious to ascertain the future of the airline.
A Group Net Loss of LKR 28,339,51 was reported in 2016/17, up 135% from Group Net Loss of LKR 12,083.62 in 2015/16. Latest Group Net Loss includes LKR 14,362.81 Mn. paid as compensation for the cancellation of lease agreements for four Airbus 350-900 aircraft.
Significant increases in Operating Expenses compared to previous year were; Aircraft Maintenance & Overhaul (22%), Rental on Leased Aircraft (13%) Employee Costs (12%) and Marketing & Advertising (11%).
In his message to shareholders, Chairman Ajith Dias stated, “Although our financial performance for the year is, on the face of it, less satisfactory than the year before, it has been seen in the context of numerous challenges which we faced”. He need be applauded for highlighting in his message, the airline’s operations being hampered by the “method of interacting, reporting, decision-making through bureaucratic and political channels”, an obvious reference to political interference.
CEO Suren Ratwatte, in his message to shareholders stated, “During the year under review we have carried out a strategic rationalization of our routes and our fleet and repositioned ourselves as essentially a regional carrier”.
It contradicts what was stated during his recent interview with Ada Derana of having submitted a restructuring plan to the government and awaiting approval. Or else, the airline has implemented at least parts of the restructuring plan, whilst awaiting approval. He also claimed during the interview, the carrier required less wide bodied A330 aircraft and more A320/321 narrow bodied aircraft in order to make the airline profitable. However, only 6 out of 24 routes operated with A320/321 narrow bodied aircraft during 2016/17 achieved breakeven load factor. The CEO has elaborated on the reduction in the single biggest cost component i.e. Fuel. It is not known, what percentage of the saving is due to reduction in fuel consumption resulting from discontinuation of long haul flights to Paris, Frankfurt and Rome. He made no mention of the 12% increase in manpower costs from previous year.
Several former and current staff raised questions related to the airline’s current status. Responses were brief and lacked clarity.
On the issue of monies owed to SriLankan Airlines by Mihin Air, now absorbed by the national carrier, it was stated, the government would eventually reimburse dues. No time frame was specified.