The Sunday Leader

SriLankan Airlines To Ink Deals With Qatar, Maldives

by Santhush Fernando

Sri Lanka’s national carrier SriLankan Airlines, in an ambitious plan to resuscitate the cash-strapped airline and turnaround the country’s flagship carrier, is likely to strike two breakthrough deals with Qatar Airways and the Maldives Government in the near future.

Sources close to the negotiations said that Qatar Airways management was very positive towards the deal. In addition, Maldives government, which lacks a national carrier and due to its limitations of space and operational capability, had approached SriLankan Airlines seeking increased routes to a number of European destinations via Male.

“I have been informed that Qatar Airways CEO Akbar Al Baker has been to Sri Lanka about this and discussions are ongoing,” an advisor close to the royal family of Qatar told The Sunday Leader.

“SriLankan Airlines has an ambitious but realistic plan. In three years time we can turn the airline around and make it profitable,” opined SriLankan Airlines Chairman Ajith Dias, in a previous interaction with The Sunday Leader.

SriLankan reported its last profit in 2008, but unfortunately has posting losses since the termination of its management deal with UAE-based Emirates. During the Rajapaksa regime both SriLankan and Mihin reported operational losses of a staggering Rs 89.9 billion over the last five years.

“We have to run with the new aircraft. Although we have inherited some issues -costly issues. Under the three-year plan approved by the Cabinet, during 2015 and during part of 2016 we would have to rely on Treasury funds. With the proposed restructuring of debt, we would be able to self-finance thereafter,” he added.

“Under our three-year plan we would not go for any expansion immediately but will look at how to increase load factor. Even an increase of five to 10% is tremendous.”

However at the time when asked whether SriLankan Airlines was looking at privatization or a strategic partnership, he had this to say:

“We are not to speaking to anyone. In fact who is going to invest?”

Dias added that Mihin Air would be integrated into SriLankan Airlines.

With the aim of turning SriLankan Airlines into a profit-making venture, the airline has launched a Company-wide interactive campaign titled, ‘Red to Black’ where the Senior Management of the Airline has invited the Airline’s staff to share their innovative ideas and thoughts on initiatives that can be taken to reduce losses and optimize cost as the Airline seeks to make progressive steps towards profitability.

‘Red to Black’ Campaign was initiated to foster closer relationship with the staff and make a collective effort to drive the Company towards its financial targets.

Total revenue of SriLankan Airlines has increased by 9.8 per cent in the first quarter of 2015, the Department of Census and Statistics announced last June.

“Passenger kilometers flown and total revenue of SriLankan Airlines have increased by 7.7 per cent and 9.8 per cent respectively in the first quarter of 2015. In 2014, total revenue increased 5.4 per cent to Rs 115.5 billion compared to a 4.6 per cent increase in operating expenditure to Rs 144.4 billion. However the airline continued to record an operating loss of Rs 29 billion rupees in 2014 compared to Rs 28.6 billion loss recorded in 2013.”

Attempts to contact SriLankan Airlines CEO Capt. Suren Ratwatte failed.

“It is truly a miracle that the Management did not drop Rome, Frankfurt and Paris. Now with both the Qatar and Maldivian deals going through, we have a better synergy for European routes and higher prospects of profitability,” a high-ranking source in the Ministry of Transport & Civil Aviation told The Sunday Leader on grounds of anonymity.

The Sunday Leader exclusively reported on November 15, 2015, that under its ‘Red to Black Programme’ route network in Europe will be severely reduced and routes to Rome, Frankfurt and Paris would be dropped retaining only London.

 

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