Financial Times

SriLankan Airlines saves Rs. 6 billion through cost restructuring measures

National carrier, Sri Lankan Airlines has saved Rs. 6 billion through its restructuring and cost saving measures implemented in the last accounting year (2008/09 upto March 31, 2009) and the company is forging ahead with some more cost cutting initiatives this year, according to a top official.

"From this July onwards we suspended all staff increments, bonuses, inducements and allowances and 90% of the unions agree with these measures," Manoj Gunawardena, CEO, Sri Lankan Airlines told the Sunday Times FT.

Manoj Gunawardena

He said the company has also agreed on a two-day voluntary pay cut for a month for the staff, which works out to a half month's pay per person per year. "The total saving with this initiative is about Rs. 1 billion for a year. With this initiative we want to show we have a personal commitment to uplift the airline, "he said.

He said last year's ‘Business Turnaround Plan’ saw the company restructuring its passenger and cargo revenue generation, restructuring of route network, savings through increased fuel efficiency, reducing company fixed costs, renegotiating of contracts with service providers, optimizing of sales channels, careful targeting of publicity efforts, reduced IT and communication cost and increasing productivity while focusing on People, Processes, and Technology.

“Another key initiative was the setting up of a specialised department for aviation fuel, with the responsibility of optimizing fuel efficiency, the control of costs and the elimination of wastage in all departments and activities of the organization. These included identification of the largest cost items, renegotiation of contracts with suppliers, and by simply finding ways by which to do things in a less expensive and more efficient manner," he added.

He said the tourism industry is looking forward to the 2009/10 Winter Season with much expectancy, and a number of important European tour operators have already agreed to feature the island's attractions in their brochures, while the opening up of the eastern beaches have provided an added dimension with year-round possibilities that are not subject to the seasonal monsoon.

He said the group's revenue for last year was Rs. 74.2 billion compared to Rs. 80 billion in 2007. "Since the operating expenditure rose slightly to Rs.84.4 million last year from Rs. 81.7 million in 2007 mainly due to the fuel price increase, Sri Lankan posted a loss before tax of Rs. 9.9 billion for 2008, against the Rs. 4.9 billion in 2007," he said.

He said the net loss after tax was Rs. 9.9 billion last year compared to the Rs.4.8 billion net profit in 2007. He said November will see the staff uniforms change in the company. "We will change the appearance of all our customer touch points including the cabin crews and we will go for a colour change," he said.

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