SriLankan Airlines on restructuring, takeover, re-routing
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Ajith Dias (left) Suren Ratwatte.
National carrier SriLankan Airlines on Wednesday announced its future restructuring plans, takeover of Mihin Lanka and rebranding, returning four Airbus aircraft on order and changing strategies to operate as a regional carrier. SriLankan Airlines Chairman Ajith Dias announced to the media, that it had inherited “quite a mess” but had been able to reduce losses by 45 per cent with losses down at Rs.9.03 billion as at end March 2016 as opposed to Rs.11.5 billion losses reported in 2015. In the five months of April – August of the FY losses were further reduced by 37 per cent with the group losses recording an improvement at Rs.2.32 billion compared to Rs.3.71 billion in 2015, Mr. Dias said.
In the sale of its leased aircraft from Airbus, the airline said that following some “hard negotiating” they were able to return some aircraft that this company doesn’t need, the Chairman explained, terming it as “unnecessary aircraft.” He noted that if the four aircraft had been taken over, the losses would have been completely “unbearable” adding that this would create an additional loss of US$480 million and if operated it would have created another $1 million per year. Negotiations were carried out together with the Ministries of Public Enterprise Development and Finance to terminate the contract on the leasing of four of the eight aircraft ordered, it was stated.
Due to current and foreseeable future market conditions, the onset of fierce competition, the inherited adverse financial situation of the company and very high lease rentals of the A350 aircraft these were terminated, the airline said. However one-off costs were borne by the carrier in order to terminate the contracts, it was noted. The other order on the remaining four aircraft would be decided by the new partner once the partnership agreement is entered into, the airline said since these four were due only by 2020. The airline also noted that in view of sub leasing of aircraft it was found that there were no takers for that since the airline industry was going through a recession.
Questioned whether any individual would be held accountable for the losses incurred by the government in the return of the aircraft ordered under the previous administration, Mr. Dias explained that this would be left to the government and not the airline. He also noted that the airline would make a thumping revenue loss of $47 million affecting SriLankan Airlines “severely” during the period of the closure of the Bandaranaike International Airport’s (BIA) runway from January 6 – April 6. This would lead to over 200 flights of SriLankan Airlines getting cancelled resulting in a ‘huge setback’ which has been communicated to the government, Mr. Dias noted adding that however, it was not commercially feasible to operate from Mattala.
Further, it was noted that the authorities were in the process of shortlisting by end November/ December the bidders to partner with SriLankan Airlines. SriLankan Airlines CEO Suren Ratwatte told reporters that the airline’s restructuring plans would involve becoming more of a regional airline operating to more cities in the region like Gan in the Maldives, India and other places in South East Asia mid next year as the airline pulls out of Frankfurt and Paris two key destinations into Europe by the end of November. The carrier lost almost $6 million on those routes to Europe which were operational during the conflict, he said. The airline had faced stiff competition from Gulf carriers operating into Colombo that had rates slashed by half leaving their sole gateway to Europe being London.
Mr. Ratwatte noted that their current daily flights to London would be increased to nine frequencies per week for winter and their ultimate aim would be to increase it to double daily. During the next financial year the airline would be obtaining on lease six narrow bodied aircraft, the CEO said adding that this is part of the airline’s new strategy in operating the airline as a regional carrier to short haul destinations. Commenting on the takeover of Mihin Lanka by October 31, he said there would be some layoffs while more than half of the existing staff would join the SriLankan Airlines team. Currently, Mihin has staff strength of less than 300. Meanwhile, the ground handling operations of the carrier would be carried out through a separate company, the airline said although they did not detail the working arrangement.
| SriLankan hiring pilots | |
| SriLankan Airlines, that had problems with its pilots union and the case of a drunken pilot, is currently on a recruitment drive to hire cadets for its new narrow bodied aircraft. The airline will be looking at hiring upto 18 cadets as the airline is short of pilots with only 310 available on its current staff and about four retiring next year, the airline’s CEO Suren Ratwatte said. In addition, he pointed out that they were to recruit more pilots also because there was a need to promote senior pilots as well. |