Interview: Aircraft purchases add to Sri Lanka financial burden, says Eran

Eran-Wickramaratne-3

Jan 21, 2015 (LBO) – Aircraft purchases by Sri Lanka’s previous government, which do not make business sense, have added to the financial burden of the state sector, Eran Wickramaratne, deputy minister of Public Enterprise Development, told Lanka Business Online.

Eight aircraft have been contracted for purchase over the next few years, with two likely to be delivered this year, he said. In total, six A330-300s and four A350-900 aircraft have been contracted for delivery between 2014 and 2021.

“Our problem has got compounded because during the previous period, for reasons that are really not known, we have contracted to take aircraft which don’t make any business sense to the strategy of the airline,” Wickramaratne said.

“By any stretch of your imagination, you can’t rationalize the decision. The financial drag will be tremendous as you cannot generate the revenue to support those decisions,” he said.

SriLankan Airlines had an accumulated loss of 128 billion rupees as of March 2015, up from 110 billion rupees in 2014. The company also has 143 billion rupees (1.07 billion dollars) in capital commitments for the purchase of four A350-900 aircraft over the next few years.

“If you take the airlines, there have been huge losses over a long period of time. The immediate task is to see how you can minimize the bleeding,” he said.

“An in-depth analysis is going on at the moment to decide what are the different options that can be looked at.”

Although lower oil prices will help the airline, the industry is still struggling with the same structural issues, he said.

“The oil prices will help, but when it comes to an industry everyone gets the benefit. The airline industry is in a very difficult operating environment, most airlines in the world are in a huge struggle.”

“In the airline sector in our region, the Middle Eastern players have dominated it and lots of the European airlines are unable to make profits,” he said.

Subscribe
Notify of
guest
12 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
Michael
Michael
6 years ago

Sri Lankan airlines needs to be sold partly to a larger airline operator that would strategically fit well with our own agenda for the national carrier. The government needs to look at which other entities we can privatise.

Priyan
Priyan
6 years ago
Reply to  Michael

Harry Jayawardene as the Chairman/CEO made profits without any so-called “larger” airlines. Its not a matter of profitability but to have the right people…

RanFerdi
RanFerdi
6 years ago
Reply to  Michael

Deal Was Done and Morons took It back from Emirates… And made it another lost making entity..

Perera
Perera
6 years ago

This clown is talking nonsense, as per the rest of the new govt .. If he was in charge of the airline we would still be running tri-stars!

Priyan
Priyan
6 years ago

Just goes to show the intelligence of these so-called Economists !! A350 is 25%(http://www.a350xwb.com/cost-effectiveness/) fuel efficient that their earlier model of A340. Aircraft starts getting more & more fuel in-efficient with the age & A340’s were nearly 20 years old. As a former CEO of leading bank he should realize that low oil prices prevailing now will not stay low forever; further when these were ordered oil prices were above 100 USD/BBL.

It is better to be reasonable in your criticisms rather than being political in your entire thinking…

Samson Subasinghe
Samson Subasinghe
6 years ago
Reply to  Priyan

Could’ve leased instead of bought, noh?

Shane
Shane
6 years ago

what Sri Lankan had done was a lease to buy – it was not a out right purchase…

samsaroyan
samsaroyan
6 years ago

Need not to say, everyone is tired of hearing complains and excuses from this government. It would be better if they figured out how to utilize these assets to get maximum advantage. Same story with the Hambantota port and air port, find a way to use them rather than pointing fingers and playing the blame game.
Cursing the former government will not keep Share market or Rupee up, nor it will bring forign investment to the country, sensational approach is not always the rationale approach Mr. Minister….

Tilak
Tilak
6 years ago

Once upon a time there was a united farmer family farther mother & daughter.The daughter died of a sickness & both parents were very sad over it.A trickster one day came in the guise of a stranger & told the sad mother that he came from hevan & is married to her dead daughter.So the foolish mother collected all the family jewels & gave it to the stranger to be given to her daughter & the stranger left at once.When the farther came the foolish women narated her story & said their dead daughter will receive her jewlerary soon.The farther was very angry and got on to his horse at once to hunt their strange soninlaw.The trickster saw the approaching farmer & climbed on to a tree.The farther too tide the horse to the tree & started climbing it but the clever thief climb down from the other side of the tree released the horse & started riding it and was getting away fast.The man on the tree saw this and had nothing to do.He shouted my dear son please tell our daughter that jewellery is from her mother & the black horse is from me.

ka
ka
5 years ago

Such a idiot..They know only to blame and stop every development in the country. Now its the airline….yahapalanaway..

ROSHAN
ROSHAN
5 years ago

Such an IDIOT..nothing more worth to add…

R S S Perera
R S S Perera
5 years ago

It’s time to shut down both Sri Lankan and Hemin Lanka to stop the hemorrhaging of scarce resources, and introduce an Open Skies policy to encourage more air lines to fly to Colombo from many more airports.