Govt. to infuse US$ 500mn to SriLankan Airlines as equity
4 June 2021 02:33 am
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- It’s slated to come as part of an annual budgetary allocation
- Airline’s revenues dropped to Rs.44.2 bn during the year through February 2021
The government will infuse as much as US$ 500 million to SriLankan Airlines during the next five years adding the much required capital to the national carrier, which is undergoing restructuring since last year, while retaining control under the State.
The equity infusion is slated to come as part of an annual budgetary allocation to the airline to help it turnaround as a profitable airline and to finally de-list itself from the entities on constant budget support.
The airline’s revenues slumped to Rs.44.2 billion during the year through February 2021 from Rs.180.2 billion generated in the previous year as the airline was forced to ground its flights for months due to border closures triggered by the pandemic last year, derailing the restructuring exercise which set off under the new management spearheaded by businessman Ashok Pathirage, the Chairman and CEO of the Softlogic group.
While passenger revenue fell to Rs.14.1 billion from Rs.147.7 billion, the cargo revenues rose by as much as 50 percent to Rs.23.6 billion.
Due to the soaring demand for air cargo, SriLankan Airlines converted one of its passenger flights to meet this demand while the company plans to lease a customised flight for freight to add to its existing fleet with the latest revenue route.
The airline incurred a loss before tax of Rs.58.1 billion in the same period, up from Rs.47.2 billion, taking the accumulated losses of the airline to a whopping Rs.384.4 billion by the end of February 2021.
The fuel cost of the airline, which typically averages around 30 percent to revenues, fell to 20 percent in the most recent year as jet fuel prices fell drastically in tandem with the fast descent seen in the global crude prices due to shuttered economies and grounded planes and other vehicles for months due to extended travel restrictions.
SriLankan Airline spent Rs.8.7 billion on jet fuel in 2020 compared to Rs.55.3 billion in the previous year.
Aircraft lease rentals remained the largest cost at Rs.21.8 billion, followed by Rs.14.9 billion on employees.