SriLankan yesterday revealed signs of rebound with lower losses, restructuring and repositioning.
The airline announced that net loss for the financial year ended on 31 March 2016 was down by a healthy 45% to Rs. 9 billion whilst in the first five months of FY17, it was down by 37% to Rs. 2.3 billion from an year earlier.
“If not for the heavy debt servicing, the airline would have achieved break even,” said SriLankan Airlines Chairman Ajith Dias yesterday.
The total interest bearing liabilities as at 31 August 2016 was $ 478.5 million or Rs. 70 billion and interest cost for the current year was Rs. 6.2 billion.
With a new restructuring plan in place, route rationalisation and improved productivity along with lower fuel prices, the national carrier expects a stronger rebound.
The national carrier will induct six new narrow-bodied aircraft within the next two years, part of which is a segment of the deal made by the former Government with Airbus, to cater to the company’s revamped routes with focus on the more lucrative short haul destinations said Chairman Dias and CEO Capt. Suren Ratwatte.
“Restructuring an airline is like changing the engine of a plane while it’s still flying. This is a very difficult process,” Capt. Ratwatte said.
The airline also plans to improve prospects despite having to take over the operations of loss making budget carrier Mihin Air. There are nearly 300 staff at Mihin and more than half of them will be absorbed into SriLankan. “We will do our utmost to absorb as many as we can. The Government will outline a policy for the remainder at the end of this year,” Ratwatte said.
The national carrier will start flights to Lahore, which was a Mihin Lanka route, under the absorption process, and will be the only international airline flying to Gan Island in the Maldives. They would also be increasing flight frequency to existing destinations, starting with nine flights to London in winter.
“We must take advantage of our proximity to India which is one of the big growth markets,” Ratwatte said.
Ticket prices on previous Mihin Lanka routes would likely rise after the SriLankan takeover but officials justified this by pointing out passengers would now get the full range of services, which were not available with the budget carrier. Services to Dhaka of Bangladesh and Sychelles previously operated by Mihin stand to benefit.
However, SriLankan would maintain concessional rates for religious destinations such as Bodhgaya,” Chairman Dias added.
SriLankan also said ground handling operations would be put under a new subsidiary company.