SriLankan Airlines’ 2009 Annual Report contains a query from the company’s auditors regarding the viability of the airline. In the face of what is effectively a Rs. 10 billion loss Ernst & Young have expressed “doubts that the company (SriLankan Airlines) will be able to continue as a going concern.” Figures in the 2009 Annual Report reveal that the company’s liabilities now exceed its assets by an extraordinary Rs. 8,159 million (Rs. 8.1 billion). A drastic reversal of the situation just a year ago when the airline’s assets exceeded its liabilities by Rs. 3,074 million.
The turn around from Rs. 3 billion in the black in 2008 to Rs. 8.1 billion in the red in 2009 represents a Rs.11 billion year on year decline in the position of the company’s assets — a 100 million dollar change of fortunes. A colossal loss by any standards but crippling for a small third world airline. Even allowing for the generally difficult conditions faced by airlines worldwide as a result of the global economic crisis the situation at SriLankan Airlines is exceptionally dire
The survival of the nation’s flag carrier established as Airlanka in 1978 is now in doubt. But how could what appears to have been a healthy profit making company in 2008 have become a loss ridden hulk in the space of a year?
It is claimed that Emirates recovered the value of its original $70 million investment in Sri Lankan in less than a year and subsequently continued to extract profits by selling additional assets.
Severe over staffing — a staff of over 5200 staff for a fleet of just 12 aircraft has left the airline bearing an exceptionally high cost per air mile flown. SriLankan Airlines employs approximately 400 staff per aircraft while the industry average is closer to 100.
Ideally aircraft should spend 14 hours a day in the air — which allows for optimum revenue generation, after cut backs SriLankan Airlines’ aircraft were spending just 8 hours a day in the air.
The loss of the Skywards rewards system which allowed passengers on SriLankan to claim air miles they could use anywhere on the vast Skywards network was another setback – from sundayleader