• Government absorbs US$3b debt; seeks business partner
• Accumulated loss since 2009 totals Rs. 133 billion
The operating loss suffered by Sri Lanka’s national carrier, SriLankan Airlines (SLA) has declined in 2015, largely due to the drop in operating expenditure supported by declined fuel prices, despite its accumulated losses, the Central Bank said last week. According to the Central Bank’s 2015 Annual Report, SLA recorded an operating loss of Rs. 10.6 billion in 2015, compared to Rs. 29.0 billion recorded in 2014 as per provisional
“This was largely due to a decrease in total operating expenditure by 12.3 per cent, to Rs. 126.6 billion while the total revenue increased by 0.5 per cent to Rs. 116.1 billion, in 2015,” the report said noting that total expenditure decreased as a result of the significant drop in expenditure on fuel with low global fuel prices, while the increase in total revenue was supported by increased passenger load factors and expansions in operations to key routes.
However, the Central Bank’s Report outlines that SLA has incurred an accumulated loss of Rs. 132.6 billion since 2009 while total gross liabilities to the banking sector also has increased by Rs. 24.0 billion to Rs. 33.0 billion during 2015.
“Hence, there is a need to take urgent measures to improve the operational efficiency through required reforms to convert SLA into a financially viable entity,” the report pointed out.
Meanwhile, addressing a press conference last week, Prime Minister Ranil Wickremesinghe said the government is presently seeking a business partner to take control of the airline. According to him, the proposed agreement would be similar to the one inked with Emirates in the year 1998 prior to its suspension a decade later.
Announcing other policy decisions, the Prime Minister said the government has decided to take on the US$ 3.25 billion debt and restructure the airline as a joint venture with private capital. He also noted that Sri Lanka has also cancelled half its order for eight Airbus A350 planes which the government may face penalties for cancellation in the future.
According to the Central Bank report, under a refleeting programme, five new A330-300 Airbuses were added to the fleet during 2015, increasing the total number of A330-300 Airbuses to seven and enabling the retirement of the longserved and low fuel efficient A340-300 Airbuses.
MRIA handles 906 aircraft in 2015
The Mattala Rajapaksa International Airport (MRIA) has handled only 906 aircraft during 2015 in comparison to 2,329 in 2014 and handled only 2,739 passengers, in comparison to 20,474 passengers handled in 2014, the Central Bank’s 2015 Annual Report said. The decline in operations was due to the suspension of regular operations of SriLankan Airlines (SLA) to the MRIA in February 2015.
“Total cargo handled at MRIA during 2015 was 1.2 MT, compared to 68.9 MT in 2014. By end 2015, there were 35 international passenger airlines (including SLA and Mihin Lanka (ML) and 8 charter airlines) together with 3 cargo airlines, serving in Sri Lanka, while 8 domestic airlines were also in operation,” the Annual Report outlined.
Meanwhile, air passenger movements through the Bandaranaike International Airport (BIA) increased by 9.3 per cent to 8.5 million during 2015 compared to 2014.
Transit passengers also increased by 4.1 per cent to 1.2 million in 2015. Further, the total volume of cargo moved through the BIA increased by 11.8 per cent to 215,031 MT. The total number of aircraft handled at the BIA increased by 4.6 per cent to 57,823 during 2015.
Mihin Lanka’s profit mounts
Mihin Lanka’s operating profit increased to Rs. 1.3 billion in 2015, compared to a marginal profit of Rs. 0.7 billion recorded in 2014. During the year 2015, ML added one additional aircraft to its fleet, increasing the fleet count to four, while launching more cost effective air routes and increasing flying frequencies to existing destinations, the Central Bank report said.