By Maheesha Mudugamuwa Sri Lanka’s national carrier SriLankan Airlines continues to suffer financial losses and proposals to restructure the airline are yet to take off. The total operational loss reported so far by SriLankan Airlines is Rs. 116 billion and the latest crisis to face the airline is a threat by the Ceylon Petroleum Corporation (CPC) to suspend fuel over the non-payment of dues. The CPC warned that it would suspend fuel supply to the airline from 1 October, owing to non-payment of dues, unless the airline comes up with a repayment plan. One option proposed to resurrect the national carrier is to merge the airline with a private partner to develop its businesses while overcoming its losses. However, the restructuring plan is yet to get off the ground owing to various administrative and political issues. Restructuring delays The Sunday Morning learnt that documentation work has already been completed to secure a public-private partnership (PPP) for the airline, but the proposal is yet to obtain Cabinet approval. It is also learnt that the President had also sought information on the progress of the restructuring plan at the last Cabinet meeting during which he had instructed the Cabinet to submit their views on the recommendations made by State Minister of Finance Eran Wickramaratne. The Sunday Morning also learnt that the recommendations made by the State Minister were similar to the recommendations put forward to the Committee on Public Enterprises (COPE) and Parliament earlier. In the latest attempt to save the national carrier, a 10-member committee was appointed by President Maithripala Sirisena in January to submit recommendations for a restructuring plan for SriLankan Airlines. Billions in losses At present, SriLankan Airlines has a deficit asset base at a minus level and has an inherited state of operational loss that increases year by year. The total operational loss reported so far is Rs. 116 billion. The total loss for the period 2009-2019 is Rs. 240 billion. In addition to the losses incurred, the total value of loans owed by SriLankan Airlines to state banks and state institutions including the CPC is Rs. 146 billion. According to the recently released COPE report, the operating loss suffered by SriLankan Airlines was Rs. 4,428 million in 2008, when Emirates withdrew from the management of the airline. A total of 14 aircraft comprising five A320 aircraft, four A330-200 aircraft, and five A340-300 aircraft were operated by the company at that time. Looking for PPP Trade unionists attached to SriLankan Airlines said that the national carrier has national obligations unlike the other airlines, and while analysing the losses incurred by the airline, attention should also be paid to the contribution it made to the national economy through other avenues. Speaking to The Sunday Morning, Sri Lanka Nidahas Sevaka Sangamaya (SLNSS) – SriLankan Airlines Branch General Secretary Janaka Pathirathna said employees of SriLankan did not oppose a PPP with 51% of the shares being kept with the Government. “If they are planning to go for a PPP, they should look for a partner now. It seems like there is no investor interested in acquiring SriLankan with its current financial loses,” he stressed. According to the trade unionist, SriLankan is said to have spent around Rs. 100 million in consultation fees to a foreign company to advise them on restructuring. Further elaborating the ongoing restructuring plans, Pathirathna noted that the consultations were a failure as the foreign company had no experience in handling a national carrier, but only domestic flights. The consultancy firm had submitted a few recommendations including the cutting down of ground-handling time without considering the amount of luggage it had to handle, he stressed. “From such a company, it is impossible to expect good recommendations,” Pathirathna stressed. Elaborating on the losses incurred by SriLankan, the trade unionist also noted that SriLankan at present is gaining profits from ground handling, engineering, cargo handling, and catering, and the losses are incurred only through operations. When asked whether there were international flights on which SriLankan incurred heavy losses, he explained that there were several flights to Europe in which the airline incurred a loss of around Rs. 3 million per flight, and also on some destinations such as Australia. However, those losses should be calculated differently, he stated. As SriLankan Airlines is the national carrier, it helps to bring down European tourists directly to Sri Lanka through its direct flights to London while helping the Sri Lankan diaspora that lives in some countries like Australia. Change of management Another concern raised by the trade unionist is the continuous change of the management of SriLankan which has ultimately resulted in the failure to get a proper understanding on at least a single business plan implemented by the managements that ran the carrier from time to time over the past five years. “Every six months, we get a new minister and a new management; SriLankan’s management has been changed at least four times during the last few years, and none of them implemented a single plan. As a result, the carrier incurred huge losses,” he alleged. “Our request to the Government is to keep at least one management for several years to see whether they can do something to overcome these issues rather than changing the management even before the implementation of any plan,” he added.

Assistance sought to clear past dues: CEO

Commenting on SriLankan Airlines’ restructuring plans, CEO Vipula Gunatilleka said the restructuring plans were submitted to the expert committee appointed by the President in January this year. “The committee report was discussed recently at the Cabinet meeting. Further, the restructuring initiatives identified by the management that come under the purview of the management are being implemented and have seen good progress,” he told The Sunday Morning. When queried about the allegations that the airline had made a payment of Rs. 100 million to a consultative firm, the CEO said: “The consultative firm was sourced by the Government to facilitate the restructuring process, and the fees were paid by the airline’s previous board and management.” Highlighting the dues owed by the airline to the CPC, Gunatilleka said the repayment plan was prepared as per the cash flow of the airline and submitted to the Government and the CPC, and payments were being made according to a plan on current dues. “The question of past dues has escalated to the shareholder and the management sought the support of the Government to clear the past dues,” he stressed. Highlighting the business development plans in the pipeline, Gunatilleka said: “We are looking forward to implementing a new route strategy which includes the launching of services to new destinations such as Sydney, Saigon, Calicut, and Ahmadabad, subject to getting the timely approval from the Government to lease the aircraft. “The proposal to recommence services to some of our destinations in Europe, to which services were suspended, has been differed for the time being, mainly due to the consequences to tourist arrivals from the Easter attacks. As per the new business plan, the number of direct destinations will increase from the current 36 to 45 and the fleet will increase from the current 25 to 27 within the next five years,” he added.