SriLankan Airlines’ losses fly higher: Moves to lease Heathrow slots

By Sunimalee Dias

The national carrier, SriLankan Airlines, plans to sell or lease its slots at Heathrow airport in Britain under an extensive review programme as it acknowledged incurring a huge loss for the current financial year.

The losses made in 2011/2012 financial year ending March 31 would go beyond the 2010/2011 level of Rs. 202 million and exceed the budgeted loss of Rs. 8.3 billion, SriLankan Airline’s Chairman Nishantha Wickremesinghe told the Sunday Times.

The airline had budgeted the 2011/2012 losses at Rs. 8.3 billion but had expected it to increase due to the high fuel prices.

SriLankan Airlines which obtained 13 slots by 2011 through a tedious process of applying for slots over a period of nearly 20 years and bilateral air services agreements, is looking at auctioning at least seven of these slots to recoup some moneys for the increasing losses suffered by the airline, the Sunday Times learns.

On the other hand, if the national carrier fails to utilise all 13 slots or ensure 70 percent utilization, it can also run the risk of Heathrow Airport authorities confiscating these slots. Mr. Wickremesinghe said 60% of the operational cost was spent on fuel, and it was a vital factor for any airline.The increase in flight destinations should have ideally brought in a surge in revenue, but it did not take place due to the financial crisis in Europe.

He said the airline did not gain much on European routes and might reduce the frequency this year.
The chairman said that from April, the airline would reduce its flights to London from 12 to 7 a week and divert most of them to China, a sector that is generating more revenue these days.

The airline’s Chief Marketing Officer G.T. Jayaseelan said yesterday they had explored possibilities and proceeded to put SriLankan’s slot at Heathrow on auction through a virtual forum after which at least three airlines got in touch with SriLankan.

He did not name the three airlines, but the Sunday Times learns that some of the Gulf carriers and Virgin Atlantic had expressed interest. Mr. Jayaseelan said the airline was more interested in leasing these slots on annual basis rather than selling them outright. He, however, said that with reports of increased forward bookings from Britain the matter was subject to an "extensive review".

He said the airline was increasing its flights to West Asian destinations such as Jeddah, Riyadh and Kuwait, and to Beijing, Shanghai, Guangzhou and shortly to Kuala Lumpur. In spite of the airline increasing its losses in the 2011/2012 it would continue to focus on the purchase of new aircraft and refurbishment of existing ones, Mr. Wickremesinghe said.

He said SriLankan woud be buying four brand new A320 aircraft by next month and refurbishing cabins of some of the existing ones in terms of seats and entertainment. For this purpose, the Cabinet has approved US$ 100 million a year for five years.

Meanwhile, UNP frontliner Ravi Karunanayaka told the Sunday Times that SriLankan, though suffering huge losses, was fudging the books by manipulating figures and shifting the expenditure to next year in a bid to reduce losses.

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