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SriLankan brings down payroll cost to US$ 7 million

17 May 2020

[caption id="attachment_41279" align="alignleft" width="300"] SriLankan Airlines Group Chief Executive Officer Vipula Gunatilleke[/caption] Recent salary cuts and layoffs at SriLankan Airlines, necessitated by the global Covid-19 pandemic, have brought down the national carrier's monthly payroll cost to $ 7 million, from approximately $ 8 million earlier.
This is according to SriLankan Airlines Group Chief Executive Officer Vipula Gunatilleke, who disclosed this in response to a query by The Sunday Morning Business. The employment categories of the airline are classified into cabin crew, flight crew, executive managers, senior managers, aircraft engineers, and aircraft technicians. Based on the annual accounts from March 2017 to December 2017 of the financial year 2017/2018, the total remuneration cost of senior managers, managers, and executives constitutes 2.36% of the total cost while the total remuneration cost of the cabin crew and flight crew constitute 2. 84% and 3.75% of the total cost of the airline, respectively. Gunatilleke also noted that the monthly lease cost of the airline is around $ 14 million and constitutes about 40% of the airline’s monthly fixed costs. Rentals on leased aircraft increased to Rs. 29 billion in 2019, compared to Rs. 25.7 billion in 2018; a 13.1% increase year on year. In 2019, the group’s operating expenses amounted to Rs. 215 billion, an increase of 23.2% over the group’s operating expenses of Rs. 175 billion for the year 2018. Out of the total withholding tax expense of Rs. 6.9 billion, the withholding tax on aircraft leases amounts to Rs. 5.8 billion. However, our query as to the monthly earnings that are accrued from increased cargo flights, following the pandemic, and the revenue shortfall the airline is considering covering through credit lines was not answered, as the airline said it did not want to disclose it at this stage for commercial reasons. SriLankan Airlines was one of the first institutions to resort to salary cuts and layoffs, soon after the Covid-19 outbreak occurred locally and the subsequent temporary closure of the Bandaranaike International Airport (BIA) for both departures and arrivals. In early-April, the airline announced that it imposed mandatory salary reductions starting from 2.5-25% for three months. The airline also announced that increments for the year 2020 would also be frozen. On 4 May, the airline announced that they are sending 400 contract staff on no-pay leave for three months until 31 July.
Nevertheless, SriLankan Airlines is still operating special flights to bring back stranded Sri Lankans around the world, while also operating cargo flights to a number of countries. In addition to this, SriLankan was also operating rescue flights to China, Australia, and the UK to bring back their respective nationals home. Meanwhile, SriLankan is resuming flights for selected destinations in the coming weeks and bookings are being accepted at the moment. The airline is also launching special cargo flights from tomorrow (18) onwards to facilitate Sri Lanka’s exports.

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