The quest to revive the loss making national carrier SriLankan Airlines commenced week with Aviation Services Minister Prasanna Ranatunga directing officials to draft necessary proposals.
The Minister was insistent that the national carrier be brought back to its previous standard of excellence, by introducing best practices thereby transform it to be financially viable and a top-class airline in the region.
According to the Committee on Public Enterprises (CoPE) the operational losses of the Airline in FY19 amounted to Rs. 116 billion and the total loss for the 10 year period 2009 – 2019 was Rs. 240 billion though in the current financial year the national carrier has made progress to reduce losses.
The Minister earlier this week held a meeting with the newly-appointed SriLankan Airlines Chairman Ashok Pathirage and other key officials of Civil Aviation and Tourism.
The Minister directed the officials to identify the main reasons for the nosedive of the airline that incurred colossal losses and outline solutions and procedures that can be implemented immediately in the short- to medium-term, while the long-term proposals are being drafted simultaneously.
The meeting was convened to discuss the relevant plans and programs entrusted to the Tourism and Aviation Services Ministry under the National Policy Framework ‘Vistas of Prosperity and Splendour’ of President Gotabaya Rajapaksa.
SriLankan Chairman Ashok Pathirage said that he had already prepared a plan to turnaround the company financially as well as with a higher brand visibility to make the National Carrier one of the top airlines in this part of the world.
Ranatunga also instructed officials to explore possibilities of providing more opportunities for local businessmen to apply for tenders in SriLankan Airlines.
He pointed out that most of the tender procedures are made difficult for homegrown companies to apply for and as a result the airline had undergone problems relating to the quality of food served inflight several times.
Noting that developing local enterprises and industries was one of the main objectives outlined in President’s manifesto, he said it was important to locally source food items that are home grown instead of importing at a higher price.
The Minister reiterated that the Government policy was to improve national assets and add value to existing resources and not sell them to any foreign entity.
Ranatunga called on all stakeholders to work hard to turn local enterprises into profitable ventures.
The fresh attempt comes after in January 2019, the then President Maithripala Sirisena received a report of a 12-member Committee headed by former State Minister of Finance Eran Wickramaratne on the future of the national carrier.
The other members of the committee included former Dr. Harsha de Silva, Dr. Nandalal Weerasinghe, Dr. Dharmarathna Herath, Prof. D.B.P.H. Disa Bandara, V. Kanagasabhapathi, L.S.I. Jayaratne, Viraj Dayaratne, Mahen Gopallawa, Wasantha Kumarasiri, Ajith Amarasekara and Thisuri Wanniarachchi.
The report made recommendations on three sections – liquidation and reestablishment of the institution, the management agreement, and the debt restructuring and the capital generation. Under the restructuring of the State-owned institution, the Committee recommended focusing attention on identifying an independent board of directors and management, revision of project models, restructuring of human resources, providing an independent procurement process, and looking for cooperation in brand promotion.
SriLankan Airlines last month issued a statement noting that it had 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 under the leadership of its Board of Directors with the unstinted support of its employees across all divisions.
It said financial performance for the six months ended 30 September 2019 showing an upward trend by reducing losses by more than 50%, with a loss of $ 19 m before interest and withholding tax against a loss of $ 39 m for the same period in the previous year.
After interest and withholding tax, the half yearly group loss was $ 76 m, a $ 10 m improvement over the $ 86 m loss in the previous year. This was achieved despite an overall decline in Group Revenue of $ 43 m, 70% of which was due to a drop in passenger and cargo revenue.
The decline in income was offset by the considerable reduction in operating expenditure amounting to $ 55 m due to the efforts of the staff of the entire organisation in cost saving initiatives to enhance productivity and reduce admin costs and wastage. Savings in the area of engineering and maintenance for the aircraft fleet have been significant, and a cost reduction of $ 8 m was realised in 2018/19, with a further $ 23 m earmarked for 2019/2020. There has also been a noteworthy improvement in fuel performance of the NEO aircraft fleet.
(FT)