Dubai: Sri Lankan Airways is in a race to revive flight frequencies and enhance the variety of plane in service by changing those which might be going off-lease by mid-next yr.
The GCC markets, particularly Dubai and the UAE, stay important for the airline to realize at the least some – if not all – of those targets, mentioned its CEO Richard Nuttall. It would proceed to be exhausting work because the airline has been battling legacy points surrounding its monetary viability. On the similar time, there’s additionally the broader context of the nation itself having to rebuild its financial system.
However Nuttall is kind of away from what the airline must be doing. Sri Lankan Airways has to double its capacities on its excessive demand routes. The airline operates 43 each day flights to Dubai, Abu Dhabi, Doha, Riyadh, and Kuwait, serving predominantly Sri Lankan expats.
“That is a lot much less capability than pre-Covid operations of twice each day flights from all these locations,” mentioned Dimuthu Tennakoon, Head of Worldwide Gross sales and Distribution of Sri Lankan Airways. “Leisure site visitors has to choose up as a result of there’s a rising demand for tourism to Sri Lanka from this area.”
No copy-paste on enterprise mannequin
Nuttal mentioned Sri Lankan Airways can not copy the monetary fashions of different carriers, particularly these within the Gulf.
“We have to determine the place we are able to compete and the place we can not,” he added. “The problem is that there’s not sufficient provide of airline seats. So, the yields are fairly excessive.
“Which really may not be nice for shoppers. However it’s fairly good for airways attempting to revive balance-sheets after pandemic instances.”
Continuous flights are additionally a bonus for some travellers, and Sri Lankan Airways is specializing in flying eastwards to the Gulf the place they’ll get their fair proportion of point-to-point site visitors. Additionally they plan to codeshare with Gulf carriers to spice up Sri Lanka as a hub, mentioned Nuttal.
Promoting the airline?
Final yr, the Sri Lankan authorities agreed to restructure and partially privatise a number of state-owned enterprises (SOEs), together with the airline, with the Worldwide Financial Fund (IMF). Step one is to discover a method to restructure the corporate’s balance-sheet. The federal government established a State-Owned Enterprise Restructuring Unit (SRU) underneath the Ministry of Finance to assist privatise SOEs working with worldwide contractors. “At some stage throughout that course of, we’ll ask for Expressions of Curiosity for purchasing the airline,” mentioned Nuttall. When requested if any potential patrons approached the airline for a takeover, together with India’s Tata Group (the homeowners of Air India), he mentioned, “There have been a pair (of patrons) who mentioned they is likely to be , however all we’re saying to everybody at this second is they should wait till the corporate balance-sheet is restructured.”
“I feel there’s curiosity (to purchase the airline). The Sri Lankan authorities wish to full the (balance-sheet restructuring) course of by the tip of the yr although I feel which may be optimistic.”
The airline can also be struggling to retain expertise, dropping a number of of its technical employees and pilots to GCC carriers, mentioned Nuttal. He defined, “It’s a concern, however we’re nonetheless OK. Fleet numbers are restricted in the meanwhile. We’re beginning cadet prograns, and we’re recruiting expatriates.”
The airline operated underneath harsh circumstances final yr amid scarce jet gasoline provides. Sri Lankan Airways spent round $20 million on gasoline in January 2022, accounting for 25 per cent of the prices.
Nonetheless, when gasoline costs skyrocketed in July and August, and there have been provide points within the nation, gasoline prices went as much as over $40 million. “Presently, gasoline prices have gone down to only over $30 million, and so long as they continue to be secure, we should always be capable to handle our bills,” mentioned Nuttal. “Any sudden and important will increase in gasoline costs would pose a problem for us because it takes time to regulate fares accordingly.”
The airline can also be struggling to get its fleet of 23 plane again up within the air as a result of it’s discovering it exhausting to acquire engines, significantly for its A320Neos. “We now have 18 plane flying and 4 which might be on the bottom resulting from engine issues and one which’s underneath heavy upkeep,” Nuttal mentioned. The airline has positioned a request for proposal to lease 5 Airbus A330 plane and 5 A320 jets to develop its fleet measurement to 27 by mid-2024.