SriLankan Airlines lose US$105mn in 2017, fresh turnaround effort
Apr 05, 2018 17:19 PM GMT+0530 | 0 Comment(s)
ECONOMYNEXT - SriLankan Airlines has lost 105 million US dollars (16 billion rupees) in the year to March 2018, and a fresh effort will be made to turn it around in three years and join with a strategic partner, officials said.
Newly appointed Chairman Ranjith Fernando said the new board is vetting a re-structuring plan submitted by Nyras, an aviation consultancy.
"We hope to turn around the airline in 2-3 years," Fernando said. "Some hard decisions have to be made."
The Board was in the process of vetting the re-structuring plan and will also consult with existing staff, unions and the government and management and the government and adopting a final plan with changes if necessary.
"Just because there is a restructuring plan we cannot accept it," Mano Tittawella, a new director representing the Treasury, the main shareholder said.
"The board has to be convinced that it can be done."
Fernando said while having a national airline was useful and also a matter of pride the people should not be paying taxes to keep in running.
Tittawella the Treasury was willing to back the airline with people's money but will no longer dole out money just to make up losses.
"The Treasury is very supportive of restructuring the airline," he said. "This is an organization with tremendous potential.
"The support of the Treasury has to be on sound investment management.
"The Treasury which manages public funds will have to get a reasonable return. The era of doling out money will have to end."
SriLankan has lost money ever since it was taken back from Emirates Airlines by ex-President Mahinda Rajapaksa.
The current administration appointed Suren Ratwatte, brother of Prime Minister Ranil Wickremesinghe's advisor Charitha Ratwatte, under whom more money was lost.
The airline had lost 105 million dollars in the year to March 2016.
Tittawella said the projected loss for the year to March 2018 was 140 to 160 million US dollars
"This is unacceptable," he said.
The losses came partly due to interest costs of old loans and excessively high lease rentals paid for overpriced aircraft, Fernando said.
The aircraft appeared to excessively overpriced and much more than 20-30 percent compared to prices paid by other airlines, Fernando said.
Fernando said aviation consultants found that the airlines 7,000 strong cared was 1,500 to 2,000 in excess of what comparable carriers have.
He said the board will not run the airline but once the clear objectives and timelines will be set for the management to achieve. The board were not experts in airline operations but they had business management experience.
"We have to supervise and we will set clear objectives," Fernando said. We will demand performance according to those objectives
"We will make whatever changes in management if required."
The airline had debt, including leases of 750 million dollars and a negative net assets. The airline needed 300 to 400 million in capital.
The airline would eventually look for a strategic partner or investor but the immediate priority was to cut losses and restructure the airline, Fernando said.
It will be difficult to attract a partner with the airline in its present stage, officials said. (Colombo/April05/2018)