SriLankan Airlines loses $100m

Sri Lankan airlines loses Rs10bn ( 100mn USD )

Aug 27, 2009 (LBO) – Sri Lankan Airlines group has lost 9.99 billion rupees in the year to March 2009, down from a profit of 4.9 billion rupees a year earlier as revenue fell amid a global downturn and falling tourism arrivals at home.
The company lost 5.8 billion rupees in the first quarter as shortly after the government terminated a management agreement with Emirates Airlines.
Revenues fell 7.2 billion rupees from 74.2 billion rupees.
“To compound matters, increased competition was experienced from subsidised airlines which dropped prices to fight for market share,” chairman Nishantha Wickremasinghe told shareholders.
In the second quarter the airline had lost 4.3 billion rupees, and in the third quarter it lost 1.1 billion rupees, amid tight cost control and route trimming.
In the fourth quarter losses had risen to 2.6 billion rupees as a global slowdown began to bite.
Sri Lankan has kept flying by running down cash reserves acquired by re-financing aircraft in the previous year. Cash deposits of 6.8 billion rupees had been used up during the year.
Chief executive Manoj Gunawardena said an upturn in domestic tourism would give a lift to the airline in the current year though weak economic conditions in many developed nations were a dampener.
Sri Lankan Airlines group also has a catering subsidiary.
At stand alone company level, the firm has 9.3 billion rupees and its current liabilities were higher than current assets by 8.1 billion rupees. Net assets had fallen to 6.2 billion rupees from 15.5 billion rupees a year ago.
“These factors raise doubts that the Company will be able to continue as a going concern,” the annual report said.
But revenue enhancement, new code-share partnerships, pricing, route re-structuring and cost management have made directors “confident of the Company?s ability to continue in operation for the foreseeable future,” the report said.

Conclusion: It is very unfortunate to notice how the management still keeps blaming on others even when they have driven the airline to its biggest loss in its 30 year history. The management sold 3 aircraft and cancelled around 80 weekly flights – but not all of these were done right and one might wonder cancellation of routes was done to provide loss making Mihin Lanka with some routes and of course an aircraft at below market rates. This does not come as a suprising news to anyone who is aware of the current political regime running inside the airline. Current CEO of the airline is the elder brother of President’s Personal Advisor and Chairman of the airline is President’s Brother-In-Law, but this is not all and the rest of the board of directors is also fully comprising on politicians whom I would not want to reveal due to fears of getting arrested. It is useless talking anymore about this once award winning, 4 star airline – it is all history now and is set to be buried with leadership of politics.

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