Steep fuel prices hurt SriLankan Airlines revenues

Dubai: The SriLankan Airlines Group's financial performance for the year 2007/08 was severely affected by the steep rise in the price of aviation fuel, resulting in an operational loss of $5.45 million.

The airline spent an additional $63.31 million for fuel in 2007/08, with the fuel bill increasing by 29.26 per cent to $279.66 million from $216.35 million in the previous year. This was the result of the average price of jet fuel reaching $101.81 per barrel in 2007/08, as against $87.09 in 2006/07.

However, the sale and leaseback of three Airbus A340 aircraft resulted in a group net profit for the year of $45.38 million. In the previous year, the Group recorded a net profit of $7.88 million.

The Group consists of SriLankan Airlines Ltd. and its fully owned subsidiary SriLankan Catering (Pvt) Ltd.

Reflecting the one-off gain from the sale and lease back of the three A340 aircraft, the airline recorded a net profit of $41.01 million for the year under review, compared to $5.19 million in the previous year.

Revenue from passenger sales recorded a significant increase at $590.95 million, up from $492.57 million, an increase of 19.97 per cent.

Dr. P.B. Jayasundera, the Group's Chairman, said: "The global aviation industry as a whole is in the throes of its largest ever crisis, brought about by the steep increase and uncertain direction of fuel prices, driven by a combination of price speculation in global markets, and increasing demand from the expanding economies of Asia. In the short term, SriLankan Airlines faces a challenging future, as does the entire global air transport industry, buffeted by volatile fuel prices and economic slowdown."