SriLankan submits business plan aiming turnaround in 3 years

Published : 9:56 am  July 7, 2015 | No comments so far |  | 


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ari2By Chandeepa Wettasinghe
The top management at SriLankan Airlines has forwarded a business plan to the Cabinet to turnaround the struggling national flag carrier within three years. “They (SriLankan) have forwarded a business plan to the government,” Civil Aviation Authority Chairman Shibly Aziz said at a recent forum.

SriLankan Airlines Chairman Ajith Dias told Mirror Business that the plan will be implemented following the Cabinet approval and the plan includes measures for the regional airline Mihin Lanka, which was placed under the management of the national carrier during January’s interim budget.

“It’s a plan which will bring the company to profitability in three years. I can’t reveal the technical details but we will be implementing it if we get the go ahead from the Cabinet,” Dias said.
When queried whether the airline would take further loans, Peiris said that some funds are due from the government, which would put SriLankan in a better position.

SriLankan went for a US $ 125 million bond issue last year to revamp its ageing fleet, while its earlier borrowings from the state-owned were settled by the previous regime.

The airline, from 2010-2014 had incurred a loss of US $ 850 million largely owing to higher global oil prices and partly due to mismanagement, the details of which were revealed in the Weliamuna Report early this year.
Aziz stated that the new management of the airline appointed by the current regime has realized the company’s past mistakes and is working actively to avoid any repeats.

He added that SriLankan must procure supplies and property by following proper procedure unlike in the past and does not deserve to be supported by public funding, given its recent performance.
“Are we subsidizing SriLankan Airlines to serve our inbound and outbound travellers? Has that subsidy been justified? If you look at the amount of money put into SriLankan, it is a bit difficult to justify the subsidy… If we stop SriLankan, won’t other airlines bring in tourists?” he deliberated.

However, he claimed that the subsidies were extended when no other airline wanted to enter Sri Lanka and that the national carrier had brought in tourists despite local upheavals, thereby warranting support.
Meanwhile, Aziz said that SriLankan continues to ask for protectionist measures in order to protect its market share from foreign airlines.

“SriLankan says every time ‘These guys will come and drop prices. They have deep pockets and we just can’t survive’, but then, that is part of competition. They (SriLankan) must compete and get their business. You can’t have protectionism,” he said.
He noted that when Sri Lanka continues to rise as an attractive tourist destination, more carriers would find it lucrative to start operations to Sri Lanka.

“More and more airlines will come in. SriLankan will be foolish if they try to stop it. The extent to which we will depend on them won’t be to the same extent we depended on them earlier. There is an opportunity for other airlines to come in and help us build this whole thing (tourism),” he added.