Business Times

SriLankan Airlines reduces loss, prepares for the future

SriLankan Airlines significantly reduced its loss in the last financial year and will launch wide-ranging expansion projects to transform the national carrier and drive growth in Sri Lanka's tourism industry, the airline announced on Thursday.

It said group losses were cut by almost Rs 4 billion in the financial year 2009/10 to a net loss of Rs. 6.03 billion against Rs. 9.99 billion in the previous year. The group comprises the airline and its subsidiary SriLankan Catering (Pvt) Ltd. “The positive result was mainly due to a significant reduction in operating expenditure from Rs. 84.40 billion down to Rs. 69.28 billion. Unit Cost improved sharply to Rs. 43.37 per tonne kilometer from Rs. 50.71 per tonne kilometer. Passenger Load Factor improved significantly to 77.93% from the previous year's 72.85%, while Overall Load Factor also increased to 66.72% versus the previous 65.12%,” the statement said.

Nishantha Wickremasinghe, the Airline's Chairman, told shareholders in SriLankan's latest Annual Report: "SriLankan Airlines has withstood the most unrelenting period of adversity during its 30-year history, and now stands on the verge of success in no uncertain terms. Your company successfully weathered a period of great turbulence during the last financial year, and now has its sights set firmly on expansion in all sectors of its business, with the broad objective being a return to profitability within the shortest possible time." Manoj Gunawardena, CEO of SriLankan Airlines, said: "SriLankan Airlines once again emerged stronger than ever from a turbulent year, and is now perfectly placed to drive the impending boom in the country's tourism industry, contribute to the entire national economy, and move closer towards achieving profitability."

"The company's emphasis on the principles of its Business Turnaround Plan resulted in a continuous improvement of its financial performance as the year progressed. The loss incurred during the second half of the financial year was 44% lower than that of the first half. All major contributing cost factors were significantly reduced - Fuel by 35%, Aircraft Maintenance by 19%, Catering by 3%, Landing Costs by 13%, Airport Handling by 7%, and Overflying by 16%. All major Fixed Costs were also reduced, including Aircraft Related Costs by 4%," he said.

Revenue for the year was Rs. 63.36 billion, a reduction from the revenue of Rs. 74.26 billion for the previous year, mainly on account of reduced operations and the removal of the fuel surcharge on air tickets. According to statistics of the Sri Lanka Tourism Development Authority, SriLankan brought in approximately half of the tourists who visited the island during the financial year under review, three times as many as the second placed airline.

The subsidiary SriLankan Catering (Pvt) Ltd. signed agreements during the year under review to provide catering services to several more airlines which operate to BIA, and invested in several projects to diversify its services. It also added ISO 14001:2004 certification for Best Environmental Practices, and ISO 9001:2008 for Quality Management Systems, in addition to ISO 22000:2005 for Food Safety Management Systems, and HACCP-Codex Alimentarius for Food Safety and Hygiene.

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