Financial Times

The SriLankan Airlines Group said last week profits had doubled for the 2005/06 financial year on the back of new market strategies and greater emphasis on controlling costs despite volatile fuel prices and rising competition.

In a statement the group, which includes the national airline and a subsidiary, reported a net post-tax profit of Rs 2.0 billion, up 48.33% from the previous year’s Rs 1.4 billion post-tax profits.

Group chairman Harry Jayawardene said it was yet another challenging year for the organisation. “While we are still recovering from the devastating effects of the tsunami, we faced new challenges such as the drastic rise of jet fuel prices and the deteriorating security situation in the country which significantly affected our business,” he added in a statement issued by the company on its results.

The group consists of SriLankan Airlines Ltd and its fully owned subsidiary SriLankan Catering (Private) Ltd. The Sri Lanka government owns 51.05% of the Group’s shareholding with Emirates having 43.63% and others including employees owning 5.32%.

The statement said the airline achieved a thumping post-tax profit of Rs 797.93 million, sharply up from Rs 7.66 million in the previous year.

Tim Clark, the Group’s Managing Director, noted that achieving these results after the devastating effects of the tsunami, a deteriorating security situation in the country and skyrocketing global fuel prices was a significant achievement, clearly signifying the commitment and the capabilities of “our staff.”

Airline CEO Peter Hill said the cutting-costs programme didn’t in any way compromise on the airline “providing the finest service.”

The Group’s operating revenue was Rs 62.5 billion, up 14.20% from the previous year. Airline’s operating revenue was Rs 61.2 billion, up 13.66% from last year.

Fuel costs rose by 39.73% on the back of a 33.58% increase in average fuel prices and a 4.68% increase in consumption required by the airline’s expansion in the last financial year. In real terms, an increase of one US cent per gallon translates into an added expenditure of US$ 1 million per annum for SriLankan, the airline said.

The airline launched services to Beijing and increased frequencies to many existing destinations such as Kuala Lumpur, Singapore, Bangkok, Dubai, Kuwait, Riyadh, and Indian cities.

SriLankan Catering, the subsidiary, once more achieved a record setting performance, with a growth in revenue of 40% with more than four million meals being produced during the year at a record average of 11,020 per day.