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 dramatic 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 US$ 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 of 16% from last year. Due to the non-receipt of the capital infusion of US$ 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.
The Airline is exploring all options in this regard and hopes to continue with the acquisition of more narrow body aircraft, while delaying or otherwise changing the future wide body aircraft already committed. These negotiations are now at an advanced stage and the Airline has been continuously interacting with the shareholder on this matter.
(Dailynews.lk)
