SriLankan Airlines Group Doubles Profit

SriLankan Airlines Group nearly doubled its profit in the financial year 2005/06 on the strength of new market strategies and greater emphasis on controlling costs, and in the face of volatile global fuel prices and increased competition.

The group reported a nett profit after tax of Rs. 2,041.18 million, an increase of 48.33% from the previous year’s Rs. 1,376.07 million.

“This was yet another challenging year for the group. While we are still recovering from the devastating effects of the Tsunami, we faced new challenges such as the drastic rise of jet fuel prices and the deteriorating security situation in the country which significantly affected our business,” said D.H.S. Jayawardena, Chairman of SriLankan Airlines Group.

The group consists of SriLankan Airlines Limited and its fully owned subsidiary SriLankan Catering (Private) Limited. The Government of Sri Lanka owns 51.05% of the Group’s shareholding, with Emirates having 43.63%, and others including employees with 5.32%.

SriLankan Airlines Limited achieved an impressive profit after tax of Rs. 797.93 million, a growth of 10,317% over the Rs. 7.66 million of the previous year.

“Achieving these results after the devastating effects of the tsunami, deteriorated security situation in the country and skyrocketing global fuel prices is a significant achievement, clearly signifying the commitment and the capabilities of our staff,” said Tim Clark, the group’s Managing Director.

The group’s operating revenue was Rs. 62,489 million, up 14.20% from the previous year, and the airline’s operating revenue was Rs. 61,160 million, up 13.66%. 

The group’s operating expenditure increased by 11.77% to Rs. 60,581 million, and the airline’s operating expenditure increased by 10.59% to Rs. 60,399 million.

The company’s fuel cost increased by 39.73%, on the back of a 33.58% increase in average fuel prices and a 4.68% increase in consumption required by the airline’s expansion in the last financial year. In real terms, an increase of one US cent per gallon translates into an added expenditure of US $1 million per annum for SriLankan.

Passenger revenue increased by 16.26% constituting 79% of the group’s revenue, and passenger carriage grew by 24.38%. Revenue passenger kilometres grew 11.15% to 9,050.44 million.

Cargo operations capitalized on the growth of India’s economy, including the launch of a new freighter service to Coimbatore, and achieved a revenue of Rs. 8,152 million, up 9.64%, which constituted 13% of the group’s revenue.

SriLankan Catering once more achieved a record setting performance, with a growth in revenue of 40%. More than 4 million meals were produced during the year, at a record average of 11,020 per day.

The group’s increased efficiency was evident with revenue per employee growing 10.05% and value addition per employee by 5.84%.

The group intends to continue expanding cautiously in the year ahead while consolidating in its present markets, with the launch of services to Goa (its 50th destination), the commissioning of SriLankan Catering’s new Flight Kitchen, and the expected growth of the Cargo Centre in Katunayake.

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