SriLankan Airlines performance for 2007/08 affected by high cost of aviation fuel

The airline spent an additional $63.31m for fuel in 2007/08, with the fuel bill increasing by 29.26% to $279.66m from $216.35m in the previous year. This was the result of the average price of jet fuel reaching $101.81 per barrel in 2007/08, as against $87.09 in 2006/07.

However, the sale and leaseback of three Airbus A340 aircraft resulted in a Group Nett Profit for the Year of $45.38m. In the previous year, the Group recorded a Nett Profit of $7.88m. The Group consists of SriLankan Airlines Ltd. and its fully-owned subsidiary SriLankan Catering (Pvt) Ltd.

Reflecting the one off gain from the sale and lease back of the three A340 aircraft, the airline itself recorded a Nett Profit of $41.01m for the year under review, compared to $5.19m in the previous year.

Revenue from Passenger Sales recorded a significant increase at $590.95m, up from $492.57m, an increase of 19.97%.

Dr. P.B. Jayasundera, the Group's Chairman, said: "The global aviation industry as a whole is in the throes of its largest ever crisis, brought about by the steep increase and uncertain direction of fuel prices, driven by a combination of price speculation in global markets, and increasing demand from the expanding economies of Asia. In the short term, SriLankan Airlines faces a challenging future, as does the entire global air transport industry, buffeted by volatile fuel prices and economic slowdown."

"The quantum of funds raised through the sale of the aircraft will be utilised towards re-fleeting of the A320 narrowbody fleet, and planned refurbishment of cabins on the widebody fleet," said Dr. Jayasundera.

Nishanta Wickremasinghe, Executive Director, said:

"The year under review was an important one in the history of the airline, as it brought about a change in the management control of the company upon the expiry of the shareholders agreement with the investor, Emirates. The Government of Sri Lanka reconstituted its nominees on the Board, and a new CEO and Senior Management Team were appointed to chart the future of this airline."

The airline's management changed hands last April, with the expiry of the 10-year agreement with Emirates. The Government owns a 51.05% shareholding in the airline, with Emirates owning 43.63% and employees 5.32%.

The Group's Revenue was $741.20m, up 17.63% from the previous year. The Group's Operating Expenditure increased by 19.69% to $757.53 m.

The airline carried 3,196,106 passengers during the year under review, an increase of 0.65% over the previous year's 3,175,583 passengers. This is in line with the marginal growth in Passenger Capacity, which increased by 1.81%, totalling 12,599.58 million Available Seat Kilometres (ASK) as opposed to the previous 12,375.62 million ASK.

The airline recorded 9,793.05 million Revenue Passenger Kilometres (RPK) during the year, an increase of 2.70% over the previous year's 9,535.79 million RPK.

Overall Load Carried increased by 7.11% to total 1,232.62 million Revenue Tonne Kilometres (RTK), compared to 1,150.84 million RTK the previous year. Overall Capacity increased 2.66% to 1,741.10 million Available Tonne Kilometres (ATK), as opposed to the previous 1,695.91 million ATK.

Passenger Load Factor increased by 0.67% to average 77.73% during the year under review, up from 77.05%. Overall Load Factor also increased to 70.80% from the previous year's 67.86%. Cargo carriage recorded a significant increase to total $99.00m, compared to $85.54m.

However, increased fuel costs drove the Breakeven Load Factor up to 76.18% from the previous year's 72.34%.