COLOMBO, Sri Lanka – The operating loss suffered by Sri Lanka’s national carrier, SriLankan Airlines (SLA) has declined in 2015, largely due to the drop in operating expenditure supported by declined fuel prices, despite its accumulated losses, the Central Bank said last week. According to the Central Bank’s 2015 Annual Report, SLA recorded an operating loss of Rs. 10.6 billion in 2015, compared to Rs. 29.0 billion recorded in 2014 as per provisional financial statements.
“This was largely due to a decrease in total operating expenditure by 12.3 percent, to Rs. 126.6 billion while the total revenue increased by 0.5 percent to Rs. 116.1 billion, in 2015,” the report said noting that total expenditure decreased as a result of the significant drop in expenditure on fuel with low global fuel prices, while the increase in total revenue was supported by increased passenger load factors and expansions in operations to key routes.
However, the Central Bank’s Report outlines that SLA has incurred an accumulated loss of Rs. 132.6 billion since 2009 while total gross liabilities to the banking sector also has increased by Rs. 24.0 billion to Rs. 33.0 billion during 2015.
“Hence, there is a need to take urgent measures to improve the operational efficiency through required reforms to convert SLA into a financially viable entity,” the report pointed out.
Meanwhile, addressing a press conference last week, Prime Minister Ranil Wickremesinghe said the government is presently seeking a business partner to take control of the airline. According to him, the proposed agreement would be similar to the one inked with Emirates in the year 1998 prior to its suspension a decade later.
Announcing other policy decisions, the Prime Minister said the government has decided to take on the US$ 3.25 billion debt and restructure the airline as a joint venture with private capital. He also noted that Sri Lanka has also cancelled half its order for eight Airbus A350 planes which the government may face penalties for cancellation in the future.
According to the Central Bank report, under a re-fleeting program, five new A330-300 Airbuses were added to the fleet during 2015, increasing the total number of A330-300 Airbuses to seven and enabling the retirement of the long-served and low fuel efficient A340-300 Airbuses.