Srilankan losses to ease to $80 mln in 2012/13 FY

The national carrier has set its sights on lowering losses budgeted at US$80 million in the current financial year, SriLankan Airlines CEO Kapila Chandrasena said.

During an interview with the Business Times, he said that this would ideally mean the airline would be halving its losses during the year 2012/2013. The airline’s losses soared to US$137.81 million in 2011/12.

He believed this was almost a 100 per cent improvement and noted the airline was “tracking along the projections.”

However, fuel price increases or decreases in the world market have contributed to some adjustments in their losses, Mr. Chandrasena observed. Meanwhile, though the airline’s CEO welcomed new competition based on news of the return of British Airways to Colombo it was evident that the airline had begun to worry on how to market itself better.

Mr. Chandrasena said Gulf carriers would increase capacity by selling tickets at comparatively reduced rates that had come in for opposition from SriLankan Airlines.

“We protested against selling below the cost,” he said noting that they lacked the necessary cash reserves to engage in such moves. Currently the airline makes an 85% loss due to fuel price fluctuations in the world market and “excess capacity has diluted revenue with carriers dumping prices.” He pointed out that since the airline seems to have a weak hold on the European route it was likely that they would withdraw aircraft from there and change frequencies .

The airline observed that the European recession is still taking the toll with a downturn in long haul travel, thereby affecting markets such as Sri Lanka.

Currently, the airline would operate trans-continental flights to Europe and Asia, the CEO said. And while it would sustain its current destinations, he said they would be looking at increasing frequencies