BUSINESS

SriLankan Airlines records
Rs. 1.3 billion net profit

SriLankan Airlines has recorded a net profit exceeding Rs. 1.3 billion and a group net profit of Rs. 2.1 billion for the year ended March 31, 2003.

In the previous financial year (2001/02), the company's net profit amounted to Rs. 3.2 billion, while the group's net profit amounted to Rs. 3.9 billion.

However, the performance has to be considered against the difficult environment for the aviation industry globally. Airlines around the world suffered from reduced demand for air travel since September 11, 2001, the recent war in Iraq and the SARS outbreak in Asia.

SriLankan Airlines Chairman Daya Pelpola claimed that they fared better than most. "It was undoubtedly, in vast measure, due to the prevailing climate of peace initiated by the present government," he added.

He also commended the airline's management for aptly capturing the opportunity to increase its loads and yields.

The gross profit of the SriLankan Group (the airline and its subsidiary, SriLankan Catering Services Pvt. Ltd.) was up by 91% over 2001/2002 at Rs. 8.2 billion.

The company's operating revenue for 2002/03 was Rs. 36,235 million, an increase of 23% over the previous year's figure of Rs. 29,352 million. The group's operating revenue for 2002/03 was Rs. 36,896 million, a 24% increase over the previous year's figure of Rs. 29,755 million.

Revenue from passenger sales amounted to Rs. 28,851 million (up 25% from the previous year) while revenue from cargo sales amounted to Rs. 4309 million (up 15% 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 under 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. Furthermore, punctuality is now at an all time high of 90%, which exceeds the performance being obtained by many of the world's leading airlines.

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 Rs. 868 million, an increase of 28% over the previous year.

The other major contributor to revenue is ground handling services at the Bandaranaike International Airport which amounted to Rs. 2239 million, an increase of 32% as a result of more airlines operating services to Colombo.

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