SriLankan Airlines and its catering subsidiary on Wednesday reported a Rs 588 million operational loss in 2007/08 due to rising aviation fuel prices.

However, the sale and leaseback of three Airbus A340 aircraft resulted in a group net profit of Rs. 4.89 billion against a net profit of Rs. 862.18 million, in the previous year. In a press release, the airline – which was transferred to Sri Lankan government management in April on the expiry of the 10-year agreement with Emirates -, said it spent an additional Rs. 6.5 billion for fuel in 2007/08, with the fuel bill increasing by 27.64% to Rs. 30.2 billion from Rs. 23.658 billion in the previous year. This was the result of the average price of jet fuel reaching US$101.81 per barrel in 2007/08, as against US$87.09 in 2006/07.

The government owns a 51.05% shareholding in the airline with Emirates owning 43.63% and employees 5.32%. It said revenue from passenger sales recorded a significant increase at Rs. 63,8 billion, up from Rs. 53.8 billion, an increase of 18.46%.

Treasury Secretary and the national carrier’s Group Chairman Dr. P.B. Jayasundera, recently blasted by the Supreme Court over the improper privatisation of Lanka Marine Services Ltd during his tenure as Chairman of Public Enterprises Reforms Commission, said in his report that, “The global aviation industry as a whole is in the throes of its largest ever crisis, brought about by the steep increase and uncertain direction of fuel prices, driven by a combination of price speculation in global markets, and increasing demand from the expanding economies of Asia. In the short term, SriLankan Airlines faces a challenging future, as does the entire global air transport industry, buffeted by volatile fuel prices and economic slowdown.”

He said the quantum of funds raised through the sale of the aircraft will be utilised towards re-fleeting of the A320 narrowbody fleet, and planned refurbishment of cabins on the widebody fleet. Group revenue was Rs. 80 billion, up 16% from the previous year while the operating expenditure increased by 18% to Rs. 81.79 billion. The airline carried 3,196,106 passengers during the year under review, up 0.65% over the previous year’s 3,175,583 passengers..