Sunday, June 4, 2023

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SriLankan Airlines operates without any external funding in the last two years

By: Staff Writer

Colombo (LNW): SriLankan Airlines says it did not receive any outside funding in the last two years.The airline also said it suffered a foreign exchange loss of LKR142.6 billion resulting from the revaluation of net foreign currency liabilities due to the sudden depreciation of the Sri Lankan rupee exchange rate in March 2022.

The group, in fact, made an operating profit according to the audited financial statement and before the occurrence of exchange losses, amounting to LKR1.7 billion in the year.

This is a significant achievement considering the issues faced by airlines worldwide during that period owing to the Pandemic, SriLankan Airlines said in a statement.

SriLankan Airlines presented its unaudited dollar financial statements for the latest financial year that ended in March 2023 at the recent COPE meeting in the Parliament.

During the recently completed fiscal year, the airline generated a passenger and cargo revenue of USD994 million and an operating profit of USD53 million.

The operating profit at group level was USD104 million. The group, however, incurred financing costs of USD101 million, resulting in a profit of USD3 million.

These figures may vary slightly during the finalization of year-end accounts, but essentially the airline has broken even for the first time in over a decade.s the Chairman of SriLankan Airlines stated during the recent COPE meeting, the airline has received no funding in the last two years, and continues to operate using its own cashflows.

The airline maintains operating margins in line with the best industry standards. And it is optimistic that these will be stronger in the year ahead as the country moves forward from the challenges of 2022.

As discussed at the COPE meeting, the biggest challenge yet is the country’s situation and extremely high financing costs

Although 2022 represented a year of solid recovery from the COVID-19 pandemic for the aviation industry, airlines are still facing annual losses. For instance, the Sri Lankan national carrier SriLankan Airlines reported a loss of $525 million in the year to March 2023.

Undeniably, the demand for air travel in 2022 increased to unexpected levels. Although some airlines have managed to jump on the opportunity and recoup part or all the losses suffered during the COVID-19 pandemic, some others still have to deal with negative financial results.

In December 2022, the airline failed to repay interests covering a timespan of five years on loans obtained from local financial institutions.

Notably, the Sri Lankan National Audit Office (NAO) stated the airline received $200 million in 2016/2017 and loan facilities amounting to $80.5 million from two different state banks to address short-term financial needs.

As of March 31st, 2021, the total amount due by the SriLankan carrier amounted to $196 million. Additionally, during the financial year 2021/2022, the airline secured another loan of $75 million.

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