Around 560 SriLankan employees to be retired under Rs.1.5bn VRS scheme

The Cabinet of Ministers has approved a proposal to implement a Voluntary Retirement Scheme (VRS) allowing loss-making national carrier, SriLankan Airlines, to retire approximately 560 employees at an estimated cost of Rs.1.46 billion over next three years.

The proposal was based on a recommendation of a three-member committee headed by the Secretary to the State Ministry of Aviation and Export 
Zones Development.

It was submitted to the Cabinet of Ministers by the Minister of Tourism, Prasanna Ranatunga and was approved by the Cabinet of Ministers this week.

According to the Government Information Department, the committee has recommended to implement the VRS scheme avoiding any disruptions to the operations of the airline over the next three years.

The VRS is aimed at supporting SriLankan Airlines to recover from major losses it has been accumulating over past few years. The losses are expected to further widen with the current crisis in the aviation sector caused by 
COVID-19 pandemic. 

SriLankan incurred a net loss of Rs.47 billion (US$ 255 million) at the last financial year ended on March 31, 2020

with an accumulated loss of Rs.326 billion (US$ 1.77 billion).  Further, the company’s current liabilities exceeded its current assets by Rs. 211 billion.

SriLankan has US$ 175 million US dollar denominated bond repayment scheduled for 2024. The bond is currently trading at over 45 percent discount in the international capital market, becoming one of the worst performing bonds over the past month.

Further, the national carriers also owes over US$ 400 million to State-run Bank of Ceylon and People’s Bank.