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SriLankan hopeful of completing re-fleeting process in 2-3 months
- To acquire at least seven aircraft on lease in first phase
- Currently has a fleet of 22 aircraft but only 18 in service
- Fleet limitations identified as biggest obstacle for airline’s growth
- Lazard appointed to restructure airline’s balance sheet
By Indika Sakalasooriya
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Ashok PathiragePIC BY PRADEEP PATHIRANA
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National carrier SriLankan Airlines is expecting to wrap up its re-fleeting exercise, which got the Cabinet approval last year, in the next two to three months, acquiring at least seven aircraft in the first phase, a top official said.
“We have almost finalised most of it. So, I think within the next two to three months we are expecting to complete it. Of course, not the whole thing. Whatever that we have finalised and available for delivery, we will get it.
At this moment, we have at least confirmed on five narrow bodies and two A330s,” SriLankan Airlines Chairman Ashok Pathirage said.
The airline currently has a fleet of 22 aircraft, out of which four are grounded due to delays in procuring required spare parts, largely due to increased global demand for aircraft and engines after the pandemic.
SriLankan doesn’t own a single aircraft and all the aircraft it operates are on lease.
All new aircraft leases will be funded through the airline’s current cashflow and it had not gone to the Treasury for funds for its operations in the last two years.
Pathirage said the biggest challenge SriLankan is facing at the moment is its inadequate fleet, which impedes operating flights on new routes and increasing frequencies to destinations the airline is already flying, where there is demand for additional flights.
“For example, there is huge demand for additional flights to India. But because of the current fleet limitations, we cannot do that,” Pathirage said.
Based on the unaudited financial statements for the year ended on March 31, 2023 (FY23), SriLankan said it was able to break even for first time in over a decade.
The SriLankan Airline group, including ground handling and catering businesses, which hold monopoly rights, made a US $ 3 million profit in FY23, after making an operating profit of US $ 104 million and incurring a finance cost of US $ 101 million.
SriLankan is saddled with debt, estimated at US $ 1 billion accumulated over the years, which the government is trying to settle by privatising the airline.
Being a state-owned entity, SriLankan also defaulted on its foreign financial obligations following the debt standstill announced by the government last April.
Pathirage said the financial advisory group Lazard, which has been hired by the government to advise on debt restructuring, has recently been appointed to restructure the airline’s balance sheet.
“At the moment we have appointed Lazard to look at our balance sheet. They are going to restructure the balance sheet. So, they probably will recommend whether the entire debt to be taken under the Treasury, similar in the case of CPC or part of the debt,” he said.
“If the Treasury is happy to take over the debt, the airline will make US $ 100 million right now because we paid a US $ 100 million finance cost for FY2023,” he added.
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