Sri Lankan Airlines hopes to break even by 2015/16

air lanka     Sri Lanka’s national carrier, Sri Lankan Airlines has indicated to the parliamentary Committee on Public Enterprises (COPE) that it was facing significant financial losses.

United National Party (UNP) parliamentarian, Ravi Karunanayaka  said that the airline had informed COPE last week that it is expected to lose an additional Rs. 34 to 35 billion within the next few years.

The national carrier, which was managed by Dubai’s Emirates airline for ten years till 2008, made a record loss of 17.18 billion rupees in the 2011/12 financial year, from a loss of 202.3 million rupees a year ago.

Sri Lankan has to operate unprofitable European routes, because the country’s economy, hard-hit by the 26-year war that ended in 2009, relies heavily on tourism. “The main reason for the loss is we were operating a network where certain regions were making losses, especially Europe, which consisted of 60 percent of last year’s total loss.” chief executive Kapila Chandrasena said.

Last year, half a million tourists visited the island from Europe, and the airline operates about 253 flights a week out of Colombo to European, Middle Eastern and Asian destinations, using a fleet of 22 aircraft. With half the airline’s costs spent on fuel, ageing, inefficient planes have also hit profit, he said.

The company now wants to add routes to more profitable destinations, and gradually replace its fleet with newer, more fuel-efficient aircraft.

Under a five-year strategic plan the company hopes to add more routes to India and East Asia to take advantage of rapid economic growth there. The Middle East is also important because of the hundreds of thousands of Sri Lankan migrants working there.

The airline, which is 51 percent state-owned, is not planning to increase capacity in the next four years, and hopes to break even, or be close to that point, in the 2015/16 financial year.

However, government plans to invest $500 million over five years, with $100 million per year through 2016, will leave a shortfall for implementing the turnaround plan, Chandrasena said, as the airline needs that funding within three years.

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