SriLankan Catering awaits new Cabinet Procurement Committee to kick off Rs. 250 m expansion

By Charumini de Silva

SriLankan Airlines Catering Ltd. is awaiting the appointment of new Cabinet Procurement Committee to call for Request for Proposals (RFQs) to double its flight kitchen output with a Rs. 250 million investment, a top official confirmed.

“We hope to call for the RFQs for the flight kitchen expansion project once the new Cabinet Procurement Committee is appointed,” SriLankan Airlines Catering Ltd. CEO Lalith Withana told Daily FT.

The National Carrier’s profitable catering arm received Cabinet approval in August last year to go ahead with what would be its first major expansion, worth Rs. 250 million.

The company prepares meals for airlines at the Bandaranaike International Airport (BIA), which currently serves 23,000 meals daily and the expansion will give a capacity to increase the servings to 40,000.

The total size of the catering unit is 18,348 M2, with 68 cold rooms, 12 freezer rooms and 2,965 M2 bonded storage capacity. It also caters to 37,726 flights per year.  

Withana said the company was looking at two phases to boost its capacity and nearly double the number of meals served.  Accordingly, the first phase will be to find out from the consultants whether by studying the current facility, work flow and machinery, they can change some of these and increase the production capacity in the interim. The second phase will be to draw up plans on what type of expansion has to be done, to get its capacity up to 40,000 meals per day.

When asked if SriLankan Catering Airlines would add more chefs/staff to the new facility, Withana pointed out that it needed to be studied carefully and would be decided once the full report was ready by the consultant firm.

SriLankan Airlines Catering has seen a year-on-year growth of 7-8% in passenger arrivals to the BIA. To date, SriLankan Catering has managed to boost the number of meals served via small changes to the facility at different times. Focus will be on continuous improvement to productivity, rather than adding new staff.

The expansion is likely to take about two to three years to complete at the existing building.

The current facility, set up in 2006, has a designed capacity of only 14,000 meals, but the National Carrier has succeeded in boosting the number of meals served to 23,000. The highest-ever number was 28,000, but such demand cannot be met on a continuous basis sans an expansion.

Clients of SriLankan Catering Ltd. include Qatar Airways, Saudia, Malaysia Airlines, Oman Air, Tui Fly Nordic, Cathay Pacific, Turkish Airlines, Ukraine International Airlines, Royal Flight Airmens, Thomson, Azur Air, Himalaya Airlines, KLM, Japan Airlines, Vista Jet, Air Culinaire Worldwide, IndiGo, TAG Aviation, Emirates Airline, Areoflot Russian Airlines, Rossiya and Chongqing Airlines.

Despite challenges, SriLankan Catering operations and quality are comparable to any best caterer in the world, officials believe. “While the need for the capacity will be addressed, the management will continue to provide a service that can match with any world standard.  We also expect to have a more efficient and a productive facility with this expansion,” he added.

In FY19, total meal production saw a marginal 5% dip to 5.54 million meals. However financial performance was impressive. The Company’s revenue rose by 13.4% in FY19 to Rs. 9.75 billion and gross profit rose by 16.6% to Rs. 7.72 billion with gross profit margin improving from 77.1% to 79.2% mainly due to increase in average meal price, new airline customers and stringent controls over the cost of raw materials.

The company’s net profit increased by 44% Rs. 5.6 billion in FY19 with net profit margin increasing from 45.2% to 57.5%.