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SriLankan
profits soar despite global travel recession Head of Commercial
G.T. Jeyaseelan said that it was difficult to specify the most profitable
routes since most of them were interconnected, but he mentioned
that Male and all Indian destinations helped boost the airlines
profitability. SriLankan flies
to nine Indian destinations, with an Airbus A-320 aircraft added
to the fleet in April this year for the launch of two more destinations
- Cochin in India and Karachi in Pakistan. Chief Executive
Officer Peter Hill, who was in India last week canvassing for increased
seating capacity to highly lucrative Indian destinations, said that
bilateral air services agreements had restricted the number of seats
SriLankan Airlines could operate to a minimum of 4,500 a week, with
the airline managing to buy a further 2,000 seats from two Indian
carriers. "Ideally
we would like to have 10,000 seats to Indian destinations a week
just to meet the current demand alone," Hill said, adding that
the airline was also keen to start a flight to the southern Indian
city of Hyderabad. The airline
has also planned to take in two new A-340s on an operating lease
for 10 years, in the winter of 2003 to increase capacity on European
and Far Eastern routes Despite the
global recession in travel, stemming from the effects of the September
11 terrorist attacks, the Iraq war and the SARS outbreak in Asia,
SriLankan Airlines managed to achieve a net profit of Rs. 1.3 billion,
and a group net profit (the airline together with its subsidiary
SriLankan Catering Services Pvt. Ltd) of Rs. 2.2 billion. "We have
definitely been assisted by the situation that exists in the country.
Peace has brought a substantial benefit, not only to SriLankan Airlines,
but to the country in general, and we hope it will be a lasting
peace," said Hill, addressing a press briefing at the launch
of the company's annual report. In the previous
financial year (2001/02) operating losses amounted to Rs. 3 billion
as a result of the terrorist attack on the Bandaranaike International
Airport (BIA) in July 2001, in which six aircraft were destroyed.
However, an extraordinary gain to the tune of seven billion rupees,
by way of a balance from insurance cover, helped convert the company's
operating loss to an operating profit of three billion rupees. "Although
we had liked to see a bottom line in the previous year, we couldn't
really take the credit for it. The only credit we could've taken
was for surviving during that period," Hill said, adding that
the company had bounced back strongly during the last 12 months,
and predicted that the company was on course for an ever better
performance for the coming financial year. "Our performance
for the first four months of this year (2003/4) has been impressive
and we're quite convinced it would continue throughout the year,"
Hill said adding that despite April and May generally being the
weaker months in the industry, SriLankan had performed better than
budgeted, even during those two months. Despite the
airline recording a passenger seat factor of 76.08 percent, up 7.57
percent from last year the global impact on air travel saw air transportation
incurring a loss of Rs. 1.7 billion, which is a substantial reduction
when compared with the previous year's loss of Rs. 5.4 billion.
Hill said that
air transportation losses was a common problem within the industry,
which was usually mitigated by profits earned through ground handling
charges. "However, this year we hope to turn it around, with
our aim being to at least break even, as far as air transportation
is concerned," he said. The company's
operating revenue for 2002/03 was Rs. 36 billion, an increase of
23 percent as against last year, while the group operating profit
was up 24 percent at Rs. 37 billion. Revenue from
passenger sales amounted to Rs. 28.8 billion, up 25 percent from
the previous year, while revenue from cargo sales amounted to Rs.
4.3 billion, up 15 percent as against last year. Punctuality
had also reached an all time high of 90 percent, which has exceeded
the performance of several other leading airlines. With regard
to the MoU between the government and Emirates, (which presently
holds a 43 percent stake in SriLankan), and the loss of the monopolies
of SriLankan catering services and both passenger and cargo handling
at the BIA, Hill said that though in theory SriLankan profits could
be affected, it was still too early to comment. The subsidiary SriLankan Catering Services Pvt. Ltd achieved a net profit of Rs. 868 million, an increase of 28 percent over the last year. Ground handling services at the BIA have also shown an increase of 32 percent, netting in a sum of Rs. 2.2 billion. Pinthaaru
2003 art auction This auction
and sale will be held on August 16 at the Colombo Plaza Hotel. Around 20 artists
of local and international repute would display and auction over
75 paintings at this event. The paintings would be on display at
the Atrium Cafe from 10.00 a.m. onwards and the auction would commence
at 5.30 p.m. Participation at this event is by invitation only. If you want to find out more about this event, email pinthaaru@yahoo.com. People's
Bank improves profit, on verge of privatisation Director -
Restructuring and Strategic Development, Derek Kelly said that the
bank needed to infuse fresh capital, estimated at seven billion
rupees, from new investors, since the government had refused to
use taxpayers' money to revamp the bank. He said that
several private sector firms, including government institutions,
had expressed keenness to acquire an equity stake in the bank. The
government intends to sell its stake as a single unit. People's Bank
recorded a net profit of Rs. 1,057 million after tax for the first
half of 2003, which bettered the total profit of Rs. 1,005 million
recorded for 2002. The net profit
was made after making conservative provisions to the tune of Rs.
638 million, well in excess of Central Bank stipulations for the
first half as possible loan losses. The bank plans
to wipe out its negative net worth of Rs. 2 billion by the end of
2004, prior to the privatisation programme, and is also committed
to restructure its Balance Sheet, to achieve the required levels
of capital adequacy, initially through internal growth and thereafter
by an infusion of capital. The capital
deficit of the bank is Rs. 9 billion, while capital adequacy has
improved to minus eight, against the minus 11 two years ago. Kelly said
that despite the bank reporting profits, it was necessary to privatise
the bank in order to rid the institution of politicisation, which
had crippled the bank over the last several years. Chairman Lal
Nanayakkara said that since his appointment to office in January
2002, there had been no political interference in bank activities,
and not even a casual hand was recruited during his tenure. The
bank has reduced its staff from 11,800 in 2002 to 10,500 at the
end of the first half of 2003, with a further 500 employees expected
to retire at the age of 55 by the end of the year. Nanayakkara
said that operating costs had increased by 12 percent to Rs. 4.4
billion as a result of the pending 10 percent salary increase in
January 2004, and the increase in funding levels towards the Bank
Pension Fund. The bank is expected to pay Rs. 800 million in relation
to VAT expenses as result of its huge payroll, and a further Rs.
500 million as full dividend on Government Bonds, making a staggering
Rs. 1.3 billion contribution to state coffers by the end of 2003. He said that
the bank's cost-to-income ratio had now reached manageable levels,
reducing from 88 percent in 2002 to 71 percent by the first half
of 2003. The bank's
Non-Performing Loan ratio was down to Rs. 24 billion from Rs. 25
billion in 2002, with the state sector accounting for 23 percent
of the total NPLs. "We are
happy with the results and they are real. However, we are not unduly
euphoric, as 40 percent of the total net income came from treasury
activities and through our primary dealer unit. Therefore,
we cannot say for certain that such profits will be sustainable
throughout the year, as the market may not remain the same,"
he said, adding that the bank expected to make a further one billion
rupees in the second half. Overall deposits
had grown by four and a half billion rupees, but with interest rates
declining, there had been a marginal drop in fresh deposits.] Nanayakkara
said that the quantum of domestic sector loans and pawning advances
had seen an improvement, whilst the bank continued its efforts to
re-profile its loan portfolio by reducing its exposure to the state
sector by 25 percent. Nanayakkara
said that even though the loan portfolio remained static even after
the decline in interest rates, the quality of the loan portfolio
had increased tremendously. "This is as a result of the bank's
frugal lending policy in order to curb its high Non-Performing Loan
ratio," he said. "It's not that there are very few lending
opportunities, it's just that we have adopted a conservative approach
in terms of providing loans," Nanayakkara added. Kelly said
that the bank's capital adequacy ratio needed to improve, if the
bank was to achieve significant growth in terms of lending. He mentioned
that in order to improve the bank's productivity and management
information, the bank was to install a Core Banking IT platform
in the second half of the year, at a cost of one billion rupees.
He said that
the bank was also in the process of finalising an in-house developed
automated online inter-branch payment system which would enable
customers to access their accounts and make payment and withdrawals
from any of the 286 computerised branches. People's Bank currently holds a market share of nearly 28 percent, with a network of 604 branches, pawning centres and service counters. The bank is expected to increase its islandwide ATM network from 92 to 100 by the end of the year. Anti-Virus
Day to promote awareness Company officials
said that anti-virus software and solutions are rapidly becoming
affordable to even small businesses and home users. They explained
that users also have a choice in choosing a solution best suited
for their budgets and level of protection needed. Further, after
initial purchase subsequent updates are available at a nominal price
where users simply need to update the existing software. Officials also
emphasized on the need to be geared with protection due to the high
cost of investment in hardware and data that is critical for businesses.
Anti-virus
solutions are the only means of minimizing the risk of a virus attack
with the increased introduction of viruses that spread through the
Internet. Visitors and corporate clients were also presented with the risk of using pirated versions of software. They emphasized that these would become illegal with stiff penalties under the new Intellectual Property Rights law and they do not offer after sales services provided by licensed vendors. Diary
of events August 12-14
- 3-day seminar on 'Strategic Human Resource Plan' organised by
the Association of HR Professionals will be held at Orchid Lounge,
Galadari Hotel from 8.30 a.m. to 5.00 p.m. August 14 -
2003 Annual Conference of the Chartered Institute of Marketing (CIM),
Sri Lanka Branch. BMICH. Theme: 'Discovering the New Consumer for
Managing Brands'. Keynote speech by Professor Micheal Halliday,
Sydney Graduate School of Management. August 14 -
40th Anniversry celebrations of Sri Lanka Chamber of Small Industry
will be held at HNB Towers at 4 p.m. August 15 -
Workshop on practices and trends in HR Management organised by the
Assocation of HR Professionals will be held at the Ballroom, Galadari
Hotel from 9.00 a.m. to 12 noon. September 8 - 10 - Facets 2003, annual event of the Sri Lanka Gem and Jewellery Association will be held at Hilton Colombo. SriLankan
mulls seaplane service SriLankan Airlines
Chief Executive Officer, Peter Hill said that the company had asked
the Civil Aviation Authority (CAA) to ensure that there was proper
legislation in place for such an operation to get off the ground.
He said that there were no legal impediments for such an operation
to commence, but it was essential that the CAA update its navigational
procedures. "Their
colleagues in the Maldives have a fair amount of knowledge about
such amphibious plane operations, and it's basically familiarising
one's self with international regulations and standards since such
operations have not been conducted in the country for the last 20
years," he said. Once the feasibility study is complete and the project seems viable, SriLankan hopes to start operations by the end of November 2003 with an initial fleet of two amphibious planes. (SG) Lionair
to go international Originally
Lionair had expressed its willingness to fly to Bangladesh and the
UAE, with the latter destination meeting with stiff resistance from
SriLankan Airlines authorities. The recently
concluded Memorandum of Understanding between the government and
Emirates provides for the opportunity for airlines based in Sri
Lanka to provide scheduled international air services, on a large
number of routes which are currently available under air service
agreements negotiated by the Sri Lankan Government. SriLankan Airlines
Chief Executive Officer, Peter Hill said that the MoU specified
that countries to which SriLankan Airlines was currently operating,
could not be used by any other operator until the year 2006, in
which time the shareholder agreement would end, and SriLankan Airlines
would lose its exclusivity in terms of selected destinations. "We understand
that they (Lionair) have made an approach to the Civil Aviation
Authority to operate on these two routes, but one of the countries
they want to operate to (the UAE) is already operated by SriLankan
Airlines, making it impossible for them to operate in that route
until 2006," he told a news conference. "As far as the countries we do not fly, such as Bangladesh, be our guest," he said. Pramuka
directors are not being paid emoluments Only those
employees of PSDB who report to collect their monthly salaries have
been paid. The depositors
and stakeholders are demanding the Central Bank remove the board
of directors who are being investigated for fraud. Some of them
have been charged in the Magistrate's Court. Pramuka Bank
Depositors' and Stakeholders' Associations are trying to modify
their restructuring proposal prepared almost nine months ago and
are seeking information on all deposits, loans, and advances. But they declined
to accept a suggestion by the Central Bank to seek information from
PSDB Directors, whom the Central Bank itself had publicly stated
were responsible for the bank's collapse. CIC
launches Flower Lovers' Club The objective
of the CIC Flower Lovers' Club is to bring together all home garden
growers and ensure that they are trained and educated on all aspects
of home gardening in order to get optimum use of their inputs, CIC
Fertilizers said. According to a company spokesman, the majority of home garden growers involved in the cultivation of foliage and flower plants lack knowledge and technology and as a result do not get the maximum from their inputs. CIC Fertilizers said it intends to educate, guide, advise and provide tips to growers through seminars and workshops in order to get the maximum from their inputs and also to enjoy home gardening as a pastime. Technically competent staff would also be visiting nurseries and home gardens to advise members as and when required. The Colombo Chapter of the CIC Flower Lovers' Club which was launched only a few days ago already has over 500 members. CIC Fertilizers which has Agri Business Centres islandwide intends to expand the membership to Kandy, Nuwara Eliya and Galle soon. Picture above shows Keerthi Kotagama, Director Marketing CIC Fertilizers Pvt Ltd handing over the first membership of the CIC Flower Lovers' Club to Miss Salome Fernando. |
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