First five months losses cut by 37%

SriLankan Airlines, which has total interest bearing liabilities to banks and financial institutions of Rs. 69.7 billion (US$ 478.5 million) as at August 31, 2016, has begun cutting losses under the new management in a tough operating environment where foreign carriers have added capacity on the Colombo sector, reducing air fares on some routes.

The interest cost for the current financial year alone is estimated at Rs. 6.2 billion. Chairman SriLankan Airlines, Ajith Dias said performance for the first five months of the current financial year saw a 37% improvement, with a lower Group Loss of Rs. 2.32 billion compared to the previous year's Group loss of Rs. 3.71 billion. The interest cost alone for this period was Rs. 2.53 billion.

"As a company, we are consciously sweating our assets harder to ensure optimal utilization of all resources," said Capt. Suren Ratwatte, CEO of SriLankan Airlines.

Dias told the media last week that cost cutting efforts and lower fuel prices helped lower losses along with the lease of an A330-300 Airbus to Pakistan International Airlines (PIA), with aircraft lease costs being the second-largest cost item next to fuel.

SriLankan Airlines hopes to negotiate a longer term lease with PIA for three A330-300 aircraft, revenues from which will offset high lease rentals on these aircraft.

"Whilst the steep drop in fuel prices contributed to the improved performance of the previous year and the first five months of the current financial year, this benefit was significantly eroded with the airline's declining revenue," the airline said in a statement. As part of the restructuring of the airline, the Government is expected to restructure the balance sheet by taking off the debt, which substantially will improve the financial position of the company.