May 09, 2016 (LBO) – Sri Lanka’s national airline’s rising debt stood at 64.92 billion rupees at the end of March 2016 against 56.92 billion rupees recorded a year earlier.
SriLankan Airlines said in a statement that without ‘one-off’ extraordinary payments related to restructuring activities, the Airline’s Group Loss was 8.9 billion rupees last year, which is a 46 percent improvement from previous year.
While the steep drop in fuel prices contributed to the Airline’s improved performance, this benefit was significantly eroded with its revenue declining 4 percent to Rs115.9bn in 2015/16 from Rs120.4bn in 2014/15, the Airline said.
“Addition of capacity to the Colombo market by other airlines, accompanied by a dramatic drop in airfares in certain markets largely contributed to the declining revenues,” SriLankan said.
“The performance was further impacted by the depreciation in the exchange rate compared to the previous year.”
The finance charges of the Airline stood at 5.6 billion rupees, an increase of 16 percent from last year.
SriLankan Airlines said due to the non-receipt of a proposed capital infusion of 125 million US dollars from 2015 budget, additional bank borrowing had to be taken which resulted in an additional interest charge of 1.73 billion rupees.
The Airline is to acquire more narrow body aircraft, while delaying or otherwise changing the A350-900 aircraft which had been ordered by the previous management.
“These negotiations are now at an advanced stage and the Airline has been continuously interacting with the shareholder on this matter.”
SriLankan Airlines said A350-900 aircraft are both inappropriate and too expensive for the Airline, given the current operating environment and the excessive lease costs.
The shareholders are currently exploring the option of a Public Private Partnership (PPP) for the Company and have appointed a Special Committee to provide direction on the broader expectations of the GoSL.
Meanwhile the Finance Ministry has advised the Airline that within the next six months it intends to re-structure the financials of the Airline including the outstanding debt.