SriLankan Airlines posts US$6 million profit

SriLankan Airlines has recorded a net profit of USD 6.26 million in what was a very difficult year (2002/03) for the aviation industry the world over.

Airlines across the globe still reeling from the effects of September 11th 2001 had to face other major setbacks - the Iraq war, terrorist activities and the SARS epidemic.

It is against this difficult environment that SriLankan achieved net profits, both at company level, and at group level (the airline and its subsidiary, SriLankan Catering Services Pvt. Ltd). The SriLankan group's net profit was USD 15.29 million. 

In the previous financial year (2001/02), the company's net profit amounted to USD 33.14 million, which included USD 74.15 million revenue from extraordinary items, while the group's net profit including revenue from extraordinary items amounted to USD 40.63 million.

As Chairman Daya Pelpola notes in his statement to shareholders, the climate of peace assisted the airline in achieving these positive results and he commended the airline's management for aptly capturing the opportunity to increase its loads and yields.

The company's operating revenue for 2002/03 was USD 376.73 million, an increase of 17% over the previous year's figure of USD 323.19 million. The group's operating revenue for 2002/03 was USD 383.61 million, a 17% increase over the previous year's figure of USD 327.63 million.

Revenue from passenger sales amounted to USD 299.97 million (up 18% from the previous year) while revenue from cargo sales amounted to USD 44.81 million (up 9% from the previous year). Passenger seat factor for the year in review averaged 76.08%, an increase of 7.57% over the previous year.

In the year in review SriLankan added an Airbus A320 to its fleet to provide the required capacity for its expansion regionally - services were launched to Bangalore and Bodh Gaya in India. SriLankan also resumed services to Frankfurt. 

Passenger carriage increased to 1.81 million from 1.62 million in the previous year. The airline has in recent years shifted its focus from leisure to a product that can be sold to all segments of the market. Stringent revenue management is the strategy used to match seat availability to anticipated demand to achieve profitable growth.

The airline's Head of Commercial G T Jeyaseelan sums up his division's performance saying: "Our reliability has improved. We have the confidence to sell our product at the price it deserves and people are accepting the fact that  it's a quality product. We are changing our focus to 'managing for profit'. We are small enough to survive and large enough to make money."

Cargo carriage increased from 46,067 tonnes in the previous year to 47,650 tonnes. In November 2002 SriLankan joined its partner Emirates to launch a Colombo/Amsterdam freighter service, which boosted cargo sales. SriLankan Cargo also made optimum use of its regional freighter which is deployed to Bangalore, Chennai, Karachi and the Maldives. Also, the airline capitalized on the pre-Gulf war boom in the air freight industry.

SriLankan Catering Services Pvt. Ltd achieved a net profit of USD 9.02 million, an increase of 20% over the previous year.

The other major contributor to revenue is Ground Handing services at the Bandaranaike International Airport which amounted to USD 23.28 million, an increase of 25%, as a result of more airlines operating services to Colombo.

Says Chief Executive Officer Peter Hill: "The next twelve months ahead will undoubtedly provide its own set of new challenges which I am confident that we will meet. Our company is now well placed to face the future with growing confidence and a vibrant work force, eager to prove to the world that SriLankan Airlines is going to be hard to beat in the years to come."