karatecatman
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Joined: 19 Dec 2006
Posts: 5233
Location: Chennai -- INDIA
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 Posted: Sun Aug 31, 2008 11:02 am Post subject: SriLankan in severe financial crisis |
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www.thesundayleader.lk/20080831/NEWS.HTM
SriLankan in severe financial crisis
By Ruan Pethiyagoda
The national carrier, SriLankan Airlines has confirmed that it is facing its worst ever financial crisis.
UNP MP Ravi Karunanayake first brought this matter to the attention of the public in parliament, wherein the government denied that SriLankan was facing any significant financial problems, but the airline's CEO, in a memo, has admitted that the airline's situation is dire.
"We will not tell you fairytales about our situation today," SriLankan CEO, Manoj Gunawardena has written in a memo distributed to all employees of the airline. "SriLankan Airlines is undergoing its worst ever financial crisis. We are not alone; bigger and stronger airlines too are facing this crisis but that is of little comfort to us."
Gunawardena confirmed this to The Sunday Leader, and outlined several steps that the airline was taking to bring itself back to profitability. In an unusually frank and candid statement from the head of a government enterprise, Gunawardena told the SriLankan Airlines staff in his memo that although the company earned Rs. 80 billion in revenue, it spent Rs. 82 billion on expenses.
"If we go on like this, last year's loss may be doubled soon and this company's future will be under threat," Gunawardena wrote. "We cannot go on like this. Our nation cannot afford us to do so."
The objective of the memo, Gunawardena said, was to keep the staff informed of the airline's true position, and enlighten them on the steps being taken at management level to resolve the crisis.
He has informed staff of an action plan to reduce overheads by Rs. 6 billion, and increase revenue by Rs. 8.8 billion, whilst asking staff members of all levels to look at ways that they can reduce the airline's costs from the bottom up, and asking for increased productivity.
The eight page document is the start of "a new culture" of open communication with the airline's employees, Gunawardena told The Sunday Leader. In it, the CEO outlines several new company policies which, it is hoped, will rejuvenate the airline, stem the losses, and make it commercially viable.
SriLankan will be slashing routes and frequencies to make its flight schedule more profitable, and expects to save Rs. 3.3 billion in the financial year with this measure, the CEO's note tells employees. It also expects the 15% fare increase introduced in June, and the fuel surcharge started in July, to increase revenue by Rs. 8 billion.
Across the board, the airline is adopting cost cutting measures small and large, according to the staff memo. The SriLankan Airlines offices at the World Trade Centre, apart from those related to customer interaction, are being moved to Katunayake. "We already have land and buildings in Katunayake," the CEO's memo stated. "So why do we need to pay expensive rent for so many floors in the country's tallest building?"
The CEO says that SriLankan's management "does not intend to continue making losses. We expect to turn this airline to profitability. This is not a dream. It is a promise that we will deliver, with your active participation."
The document also states that come what may, SriLankan will be independent and will not take money from the Treasury. "We have not received a cent from the Treasury since privatisation, and we don't intend to start now. If we are going to start off the new era by becoming a strain on the government and our fellow citizens, we will have failed already."
Wonder what happens to the new A320 renewal plan and the picking up of Mallya's A345s.
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