- Airline awaits Govt. approval to relaunch passenger flights
- Chairman says no issues with airline's finances
At the beginning of the year, with the appointment of new Chairman/Chief Executive Officer Ashok Pathirage, there was hope amongst the nation that SriLankan would somehow convert into a profitable venture, as Pathirage is well known for his success in the local business.
However, allegations have now been levelled that the airline is at the verge of collapse under Pathirage, as all payments including payments to lessors have now stopped.
It has been alleged that $ 150 million has been requested by the Chairman from the Government to pay the staff of 7,000 till March 2021. Recently, China provided a loan of $ 500 million to the Government for 22 million people of the country. The airline wants 30% of that to pay the staff of 7,000. Despite the financial constraints, the pilots have requested the Chairman to seek an additional $ 5 million ($ 155 million altogether) so that the pilots can be paid in full without any pay cuts.
If the Government refuses to pay $ 150 million, the staff will not be paid any salary for November, it is further alleged.
According to a recent audit report, during the first quarter of 2020, SriLankan Airlines has incurred a net loss of Rs. 47 billion along with an accumulated loss of Rs. 326 billion. The company’s current liabilities exceeded its current assets by Rs. 211,645.13 million and total liabilities exceeded its total assets by Rs. 273,369.08 million.
At present, SriLankan Airlines has a deficit asset base of minus level and has inherited a state of operational loss that increases year by year. The total operational loss reported so far is Rs. 116 billion, equivalent to $ 866 million approximately.
However, the total loss for the period from 2009 to 2019 is Rs. 240 billion.
At the same time, in addition to the losses concerned, the total loans owed by SriLankan Airlines to state banks and state institutions, including the Ceylon Petroleum Corporation (CPC), is Rs. 146 billion.
Meanwhile, in an interview with Bloomberg Markets Asia, SriLankan Airlines Chairman Pathirage discussed how the national carrier was coping with the impact of the Covid-19 pandemic.
As reported, it was stated that the carrier experienced an approximately 75% drop in turnover compared to 2019 due to Covid-19, and negotiated with lessors to reduce costs. It is planning to save $ 100 million per annum by reducing lease costs. Furthermore, the airline is expecting to slash the number of staff members from 7,000 to 5,000 under the voluntary retirement scheme (VRS) in the offing for further reductions.
The national carrier is already dealing with a debt of $ 1 billion owed to state banks and on international bonds, and is also negotiating with the Government to convert its debt into equity to reduce costs.
Meanwhile, the International Air Transport Association (IATA) has now predicted that global passenger numbers will fall by 66% this year, which is higher than their original forecast of 63%.
The Geneva-based body said the picture is particularly bleak in Europe, where hopes of a summer revival have been dashed by new lockdown measures.
August demand plunged 79.9% compared with last year, but improved from an 87.0% drop in July, as travel restrictions were lifted in the Schengen Area.
However, more recent flight data suggests that this trend has reversed amid a return to lockdown and quarantine in some markets, according to the IATA.
Last month, the IATA demonstrated the low incidence of inflight Covid-19 transmission with an updated tally of published cases. Since the start of 2020, there have been 44 cases of Covid-19 reported where transmission is thought to have been associated with a flight journey (inclusive of confirmed, probable, and potential cases). Over the same period, some 1.2 billion passengers have travelled.
IATA Medical Advisor Dr. David Powell said the risk of a passenger contracting Covid-19 while onboard appears to be very low. With only 44 identified potential cases of flight-related transmission among 1.2 billion travellers, that’s one case for every 27 million travellers. "We recognise that this may be an underestimation, but even if 90% of the cases were unreported, it would be one case for every 2.7 million travellers. We think these figures are extremely reassuring. Furthermore, the vast majority of published cases occurred before the wearing of face coverings inflight became widespread."
As the world airline industry prepares for the launching of flights despite the pandemic with high safety measures, Sri Lanka Nidahas Sevaka Sangamaya (SLNSS) SriLankan Airlines Branch General Secretary Janaka Pathirathne told The Sunday Morning that the airline was expecting the Government’s green light to relaunch the passenger flights.
“At present, only cargo flights are operating,” he said.
The employees on contract basis are currently at home and the airline is waiting for cabinet approval for the VRS in order to reduce the number of employees, he said.
The Chairman has requested $ 150 million from the Government to run the carrier; however, the monies are yet to be received, he said, adding that so far, the employees have received their salaries on time.
Meanwhile, when contacted by The Sunday Morning, SriLankan Airlines Chairman Pathirage said there was no issue with regard to the payment of salaries to staff members and that the carrier is handling the financial situation.