SriLankan Airlines returns to profit amid privatization efforts

SriLankan Airlines

(Photo by Fasyah Halim on Unsplash)

SriLankan Airlines, the national carrier, has returned to profitability, posting a profit of Rs.1.124 billion for the nine months ending December 31, 2023.

This is a significant turnaround as the airline is currently undergoing privatization.

In previous financial years ending March 31, the airline recorded substantial losses: Rs.73.26 billion in 2023, Rs.165.89 billion in 2022, Rs.45.23 billion in 2021, and Rs.47.19 billion in 2020.

According to official data, SriLankan Airlines generated Rs.248 billion in revenue for the nine months up to December 31, 2023. Expenditures for this period were Rs.223 billion, resulting in earnings before tax of Rs.24.5 billion.

The airline reported an exchange loss on transactions of Rs.603 million for the nine months ending December 2023, compared to Rs.25 billion for the fiscal year 2022/23. Interest costs were Rs.26 billion, while an exchange gain on loans and fixed deposits conversions amounted to Rs.3.15 billion.

The accumulated loss of the airline is Rs.611.2 billion. The government provided support with a US $11.6 million treasury guarantee to the International Air Transport Association (IATA) during 2022/23 to help with cash flow issues.

Additionally, in December 2023, the General Treasury infused equity capital into SriLankan Airlines to settle Rs.102.5 billion owed to Ceylon Petroleum Corporation, following Cabinet approval.

The report highlighted that financial constraints have disrupted the airline’s operations recently. Due to the government’s limited fiscal capacity to continue equity injections, it decided to privatize the airline to attract new investor funds and restore financial stability.

In March, Aviation Minister Nimal Siripala de Silva urged the airline to improve its financial performance, warning that failure to do so could jeopardize the jobs of its 6,000 employees. He emphasized the need to cut costs and enhance financial discipline.