SriLankan Airlines 1H group loss reduced to US$ 76mn

* US$ 10 million improvement over US$ 86 million loss in the previous year
* Says cost optimising doesn't adversely impact Airline's products and services


SriLankan Airline's financial performance for the six months ended 30th September 2019 showed an upward trend by reducing its losses by more than 50%, with a loss of USD 19 million before interest and withholding tax against a loss of USD 39 million for the same period in the previous year, a press statement issued by SriLankan Airlines said yesterday.

The press statement further said: "After interest and withholding tax, the half yearly group loss was USD 76 million, a USD 10 million improvement over the USD 86 million loss in the previous year".

"This was achieved despite an overall decline in Group Revenue of USD 43 MN, 70% of which was due to a drop in passenger and cargo revenue. The reduction in ground handling and catering revenue also impacted the shortfall, as other airlines reduced their operations following the Easter Sunday attacks. However, in the second half of the year, Group Revenue is projected to increase significantly with the enhancement in operations by SriLankan and customer airlines".

"The decline in income was offset by the considerable reduction in operating expenditure amounting to USD 55 MN due to the efforts of the staff of the entire organisation in cost saving initiatives to enhance productivity and reduce admin costs and wastage. The airline’s corporate offices in Colombo were relocated to existing space in Katunayake resulting in significant savings and enhancing operational efficiency. Negotiations with state banks to reduce interest rates are ongoing through the State Minister, and consultations continue with the major shareholder - the Ministry of Finance - to seek exemption on the imposition of withholding tax".

"Savings in the area of engineering and maintenance for the aircraft fleet have been significant, and a cost reduction of USD 8 MN was realized in 2018/19, with a further USD 23 MN earmarked for 2019/2020. There has also been a noteworthy improvement in fuel performance of the NEO aircraft fleet. An important revenue stream was re-established with SriLankan Engineering, the airline’s aircraft maintenance arm, regaining its Type-145 global certification from the European Aviation Safety Agency (EASA) and thus resuming third party maintenance services for customer airlines. This is projected to generate revenue of USD 1.1 MN in 2019/20.

Over USD 2 MN in savings were achieved through initiatives introduced pertaining to distribution cost by the Commercial team".

"The company also focused strongly on the importance and user-friendliness of its online direct sales channel and succeeded in increasing its contribution to overall revenue up to 15% from the previous 11%," SriLankan Airlines said.

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