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Thursday, 04 July, 2019, 15 : 00 PM [IST]

Easter Sunday attacks add another USD110m loss to SriLankan Airlines

Finding an investor is crucial for the airline’s long-term sustainability: CEO
The serial blasts on Easter Sunday in Colombo has added to the financial crisis of Sri Lanka’s national carrier, SriLankan Airlines, another estimated USD 110 million loss. This includes USD 90 million passenger revenue loss and USD 20 million in cargo.

Conceding that the attacks had tremendous negative impact on the airline, CEO Vipula Gunatilleka said that the management is hoping to recover the losses slowly and steadily over the next two years.Gunatilleka said that as per Central Bank’s rough estimates, the loss to the tourism sector is roughly around USD 1.5 billion. The CEO was speaking to media after announcing the third frequency between Colombo and Delhi.

Talking about the financial crisis and the restructuring plan, the CEO said that the airline’s financial crisis is mainly due to interest repayments and heavy lease rental burden. Last year alone, the airline has recorded a loss of USD 150 million. He said that the management has submitted a restructuring plan to the government and it is now for the authorities to help the airline to find out a suitable investor to be sustainable in the long run.

Commenting on the restructuring plan, he said that it clearly identifies the areas where the airline management has to implement measures to improve the financial health like cost reduction, changing business models, enhancing ancillary revenues, etc., and the policy support the government has to give to the airline.“I am currently working on programmes to reduce operational cost by 30 to 40%,” he said.

Talking about the India operations, he said that India is an important market for SriLankan Airlines and the load factor has been more than 80%. However, he agreed that the yields have been low because of the competition.

Joshua Bustos, Chief Commercial Officer, SriLankan Airlines, said that 30 to 40% of the traffic the airline carriers from India are transit passengers to Australia and other Asian destinations.  Even when the point to point passenger numbers fell for a brief period after the Easter Sunday incident, he said that the connecting traffic continued to use the carrier. Saying that India is the largest international market for SriLankan, Bustos said that they are currently in conversation with Ethiopian Airlines for code-sharing. The airline, he said, is also exploring Interline/SPA relationships with Lufthansa, Air Canada and Air India, etc.

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