Performance improves by 46% :

SriLankan’s group loss down to Rs 8.9 b

SriLankan Airlines announced that it has recorded a significantly improved performance at the close of the financial year ending March 31, 2016 (based on un-audited financials) compared to the previous year - despite several legacy issues still remaining unresolved.

Given the complexity of the business these issues are being addressed in a responsible manner together with the shareholder, as part of the restructuring program of the airline.

Without ‘one-off’ extraordinary payments related to restructuring activities, the Airline’s Group Loss stood at Rs. 8.9 billion – a 46% improvement for the current period compared to the previous year.

While the steep drop in fuel prices contributed to the airline’s improved performance, this benefit was significantly eroded with its revenue declining 4% year on year to Rs. 115.9 billion in 2015/16 from Rs. 120.4 billion in 2014/15. Addition of capacity to the Colombo market by other airlines, accompanied by a significant drop in airfares in certain markets largely contributed to the declining revenues.The performance was further impacted by the depreciation in the exchange rate compared to the previous year. As at March 31, 2016, the national carrier’s debt stood at Rs. 64.92 billion against the previous year of Rs. 56.92 billion. A capital infusion of USD 150 million (for SriLankan and Mihin Lanka) in the national budget presented to parliament in November 2014, and approved, was not included in the Interim budget presented in March 2015.The national budget presented in November 2015 did not contain it either. The finance charges of the airline stood at Rs. 5.6 billion, for the current year an increase of16% from last year.Due to the non-receipt of the capital infusion of USD 125 million, additional bank borrowing had to be taken which resulted in an additional interest charge for the financial year of Rs.1.73 billion.

Notwithstanding these challenges, the airline has been able to make significant savings in controllable cost items which have also contributed to the improved performance. This has been due to increased focus on and scrutiny of costs across all areas. The airline’s staff have come forward to make constructive suggestions towards cost saving initiatives and also worked hard at negotiating cost reductions with vendors.

Given market realities, revenue enhancements are going to be challenging. Therefore the airline will continue to work on costs, streamlining processes and improving productivity without which the Airline cannot achieve financial self-sufficiency.