SriLankan Airlines Group posts modest profit

SriLankan Airlines Group posted a Nett Profit After Tax of Rs. 1,376.07 million for the financial year 2004/05, despite multiple crises such as the Tsunami and skyrocketing fuel prices, which sharply affected its revenue and expenditure.

“The performance of the SriLankan Airlines Group during the financial year 2004/05 cannot be measured or quantified in rupees and cents. I am proud to say that the SriLankan Airlines Group and its staff proved to be a tremendous source of strength for the nation during its time of greatest crisis in the aftermath of the Tsunami of 26th December 2004. Apart from providing services free of charge for affected foreign tourists to return home, and handling the unloading of tens of thousands of tonnes of life-saving supplies, SriLankan Airlines organized relief and reconstruction efforts on both the devastated southern and eastern coastlines, which continue to this day,” said J.M.S. Brito, Chairman, SriLankan Airlines.

Tourism numbers plummeted following the Tsunami, and had a direct adverse impact on the company’s bottom line. In addition, the global airline industry as a whole was seriously affected by the skyrocketing price of aviation fuel. The company’s Fuel Cost increased by 71.49% on the back of a 41.36% increase in average fuel prices, and a 15.96% increase in consumption required by the airline’s expansion. In real terms, an increase of one US cent per gallon translates into an added expenditure of US 1 million per annum for SriLankan.

“In spite of all this we have achieved a modest profit, which bears testimony once again to the remarkable resolve and dedication of the management and staff of the Company,” said Tim Clark, Managing Director.

The SriLankan Airlines Group’s Nett Profit After Tax was down 75.58% from the previous year’s Rs. 5,635.51 million.

“This airline has a long-standing tradition of rising to face the challenges that spring up in its path, and the year under review was true to form. Although buffeted by nature’s fury and industry challenges, SriLankan Airlines remained unbowed, and continued to seek opportunities to adapt and expand,” said Peter Hill, Chief Executive Officer. “We also faced increased competition from low cost carriers and competitors who are heavily supported by their respective governments, enabling them to price their products below cost.”

The group’s Operating Profit Before Finance Cost & Tax was Rs. 1,742.08 million, a decline of 70.47% as against the previous year.

The airline’s Operating Profit Before Finance Cost & Taxation was Rs. 324.20 million, 93.22% below the previous financial year, and ended up with a marginal Nett Profit After Tax of Rs. 7.66 million, 99.83% below the previous financial year.

The group’s Operating Revenue was Rs. 54,720.54 million, up 18.46% from the previous year, and the airline’s Operating Revenue was Rs. 53,808.85 million, up 18.53%.

The group continued its expansion during the year. New destinations such as Calicut came on-line. Preparations were completed for the launch of services to Beijing. New codeshare agreements with SriLankan’s strategic partner Emirates expanded its network to include daily flights to New York and other important destinations. Frequencies to many existing destinations were rapidly increased, including London, Bangkok, Singapore and Kuala Lumpur. New ticket offices were opened within Sri Lanka, and the airline now offers paperless “E-Ticketing” to its customers anywhere in the world.

“SriLankan Airlines has made significant progress during the last financial year by expanding its network into India and South East Asia, increasing its overall capacity by 15% and its revenue by 18%,” said Mr. Clark.

Passenger Revenue increased by 15.08%, and Passenger Carriage grew by 17.48%, despite the disastrous period in January and February 2005 following the Tsunami. Capacity Production increased by 15.05% with the introduction of two more Airbus A320 aircraft during the year, and the number of frequencies in the route network increased by 28.86%. Overall Load Factor increased to 70.04% from the previous year’s 69.51%. However, Seat Factor fell by 3.19 percentage points to 71.89%, due to the negative effects of the Tsunami.

The domestic service of the airline, SriLankan Air Taxi, also acquired two De Havilland Turbo Otter aircraft and increased its number of destinations. SriLankan Catering Services Limited also continued to expand, and will triple its capacity when its new flight kitchen is commissioned in late 2005. SriLankan Cargo will also double its handling capacity when the new Cargo Centre is completed this year.

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