SriLankan says re-fleeting will be funded through its existing cash flows

Clarifying on its planned re-fleeting exercise, which has stirred much controversy, the national carrier SriLankan Airlines said all the aircraft leases will be funded through the airline’s current existing cash flows.

A statement by SriLankan also said the re-fleeting is expected to significantly reduce the airline’s cost structure going forward.

SriLankan Airlines recently published newspaper advertisements calling for request for proposals (RFP) for aircraft leases. 

“The initiation of the re-fleeting RFP is primarily prompted by the impending expiry of aircraft leases for over 50 percent of the current fleet. The airline recognizes that the current global market for aircraft leasing presents an attractive pricing environment which would maximise cost savings which can be achieved via the timely execution of a re-fleeting strategy. 

The combination into a single RFP of replacement aircraft (expiring leases) with growth needs over the ensuing period, captures benefits of scale. A single procurement exercise also avails optionality in terms of selecting the optimum fleet structure in terms of operating efficiency, aircraft type and aircraft age,” SriLankan said in a statement.  

“All aircraft leases will be funded through the airline’s current existing cash flows, and the re-fleeting is expected to significantly reduce the airline’s cost structure going forward,” it added.
The airline further said re-fleeting exercise will alongside other strategic initiatives help it to increase its operating margins and further elevate its operating cash flows which will support the timely paying down of long-term debt to the Government of Sri Lanka and other lenders. 

“The promising turnaround in the airline’s financials has accrued both from cost restructuring as well as from selective growth initiatives in terms of expansion of the route network to include new destinations, and exploitation of growth opportunities in the cargo sector.  

Forward looking plans of the airline will be closely aligned to the growth aspirations of Sri Lanka’s tourism sector which is one of the country’s largest foreign exchange contributors.  

 SriLankan Airlines is presently a net foreign exchange earner for the country. Cognizant of the broader macro-economic environment locally and globally, the airline will continue to take a measured and calibrated approach to growth with primary focus being applied to maintaining self-funded, profitable and sustainable operations,” the statement noted.