Sunday 12 July 2020

SriLankan narrows losses in H1 of fiscal 2019-20

DUBAI, November 7, 2019

SriLankan Airlines has reduced losses by more than 50 per cent during the six months ending September 30, with a loss of $19 million before interest and withholding tax against a loss of $39 million for the same period in the previous year.

After interest and withholding tax, the half yearly group loss was $76 million, a $10 million improvement over the $86 million loss in the previous year.

This was achieved despite an overall decline in Group Revenue of $43 million, 70 per cent of which was due to a drop in passenger and cargo revenue. The reduction in ground handling and catering revenue also impacted the shortfall, as other airlines reduced their operations following the Easter Sunday attacks, an airline statement said.

However, in the second half of the year, Group Revenue is projected to increase significantly with the enhancement in operations by SriLankan and customer airlines.

The decline in income was offset by the considerable reduction in operating expenditure amounting to $55 million due to the efforts of the staff of the entire organisation in cost saving initiatives to enhance productivity and reduce admin costs and wastage.

The airline’s corporate offices in Colombo were relocated to existing space in Katunayake resulting in significant savings and enhancing operational efficiency. Negotiations with state banks to reduce interest rates are ongoing through the State Minister, and consultations continue with the major shareholder - the Ministry of Finance - to seek exemption on the imposition of withholding tax.  

Savings in the area of engineering and maintenance for the aircraft fleet have been significant, and a cost reduction of $8 million was realized in 2018/19, with a further $23 million earmarked for 2019/2020. There has also been a noteworthy improvement in fuel performance of the NEO aircraft fleet.

An important revenue stream was re-established with SriLankan Engineering, the airline’s aircraft maintenance arm, regaining its Type-145 global certification from the European Aviation Safety Agency (EASA) and thus resuming third party maintenance services for customer airlines. This is projected to generate revenue of $1.1 million in 2019/20.

Over $2 million in savings were achieved through initiatives introduced pertaining to distribution cost by the Commercial team.

The company also focused strongly on the importance and user-friendliness of its online direct sales channel and succeeded in increasing its contribution to overall revenue up to 15 per cent from the previous 11 per cent.

Meanwhile, SriLankan Airlines has made significant progress in its efforts to become a sophisticated customer-centric airline intent on achieving financial success, by implementing a wide-ranging turnaround plan.

Following the appointment of a new Board of Directors in April 2018, SriLankan began implementing a wide range of initiatives to curtail losses and improve the customer experience, despite many challenges including the impact on tourist arrivals from the Easter Sunday attacks, volatile fuel prices and depreciation of the rupee.

The airline will expand its presence in the important Australian market by commencing operations to Sydney next year and further strengthen its position as the largest foreign carrier in India with the launch of services to Ahmedabad.

SriLankan also intends to stretch its wings in Southeast Asia with a new service to Ho Chi Minh City (Saigon) in Vietnam, while plans to return to Frankfurt, Paris and other earlier destinations continue to be under consideration.

A considerable effort is being made throughout the organization in order to provide the most pleasant and user-friendly experience in terms of both products and services, across all customer touchpoints. These enhancements, supported by latest cutting edge technology, will focus on complementing traditional SriLankan hospitality while blending the comforts of contemporary air travel.

The onboard passenger experience is being greatly enhanced, including significant changes to the content and user-friendly aspects of the in-flight entertainment system; revamping of the Business Class product and service; improved ranges of meals and beverages; and plans to introduce more comfortable seating in the Business Class cabins of the narrow-body fleet including the NEO aircraft serving the Far East.

Enhancements are being effected to the internet booking engine to provide a more customer-friendly experience. With the introduction of a Customer Relationship Management (CRM) tool, the airline will be able to enhance its offering to the frequent flyer members through FlySmiLes and provide greater rewards for its loyal customers, the statement said. – TradeArabia News Service


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