SriLankan Airlines loses Rs41bn, balance sheet hole Rs168bn

ECONOMYNEXT – State-run SriLankan Airlines had lost 41 billion rupees in the year to March 2019, with negative assets in the balance sheet rising to 168 billion rupees from 125 billion, with the Auditor General raising going concern cautions.

The airline however is backed by the guarantees from the Treasury allowing it to operate.

At company level (without profits of SriLankan Catering), the airline lost 44 billion rupees, with accumulated losses rising to 230 billion rupees from 186 billion rupees a year earlier.

The Auditor General said the company’s currency liabilities were 186 billion rupees more than current assets, and total liabilities were 177 billion rupees more than total assets.

“…[T]hese events and conditions along with other matters set forth in Note 3 (of the annual report), indicate a material uncertainty that may cast significant doubt on the group’s ability to continue as a going concern,” the AG said.

While noting that the accounts were prepared on a going concern basis taking into account state financial support given to the company and assurances given through cabinet decisions, the Auditor General said his opinion was “not modified in respect of this matter.”

Group revenues went up by about 20 billion rupees from 164 billion rupees to 184 billion rupees during the year to March 2019, fuel costs went up by 13 billion rupees to 60 billion rupees.

All competitor airlines however also face fuel price hikes.

Other operating expenses went up to 16.2 billion rupees from 7.8 billion mostly due a 7 billion rupees new withholding tax charge. The group was hit by an 11 billion rupees forex loss as the central bank hit the rupee with liquidity injections.

SriLankan boosted yields 12.5 percent, partly due to depreciation, though the total passenger and cargo carried fell. The US dollar yield also grew 2.1 percent. Seat capacity was boosted 2.37 percent.

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Employee costs grew to 21.9 billion rupees from 20.8 billion rupees, airport and passenger costs were contained at 2.5 8 billion rupees from 20.8 billion a year earlier, while rentals, lease and aircraft maintenance costs went up. (SB-Colombo/Nov13/2019)

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