13 July 2022 09:49 am Views - 2673
The losses at SriLankan Airlines for the first four months to April topped Rs.248.4 billion in 2022, including one-time exchange loss of Rs.145 billion that came in March due to the collapse of the rupee against the dollar, reflecting the extent to which the national carrier has become a drain on government finances and a bane on the taxpayer.
The first four-month loss reflects a massive increase from the Rs.170.8 billion loss made in the same period in 2021 and the Rs.45.2 billion loss made in the year before.
The Treasury doesn’t say whether this was an after-tax loss or before-tax loss. In any case, the current Prime Minister Ranil Wickremesinghe since taking office in May announced his intentions to sell the loss-making airline to relieve the Treasury from its endless and unsustainable burden.
According to latest fiscal data released on the State-owned enterprise performance in the four first months of 2022, SriLankan Airlines had generated revenues of Rs.71.8 billion, but the total expenses had risen sharply to a mammoth Rs.320.3 billion, which includes a one-time exchange loss booked on account of the foreign currency loans the airline has.
The airline has Rs.618.7 billion worth liabilities, including a sovereign guaranteed US$ 175 million international bond. The airline suspended payment of interest after the government decided to default on most of its foreign currency liabilities in April.
Other debts of the airline consists of Treasury guaranteed bank loans from State banks, aircraft leases, and debt with trade creditors of which Ceylon Petroleum Corporation is at the forefront.
Just prior to the government announced it was defaulting on its foreign loans, SriLankan decided to re-fleet 50 percent of its fleet,
which came under heavy flack from many sections given the dollar crunch faced by the country causing untold hardships on people.
The airline said the re-fleeting would be self funded from its own cash flows and would bring operational efficiencies and would help to add new routes, enhancing its cash flows to pay down its debt faster.
However, the global airline industry is now confronted with the challenge of rising jet fuel prices, but the pent-up travel demand has lessened the burden on the industry to some degree.
SriLankan could be facing fresh challenges from the slowdown in tourist arrivals to Sri Lanka since April onwards due to the crippling economic crisis, which has precipitated into a public upheaval since March.