SriLankan Airlines forges ahead with business turnaround plan


SriLankan Airlines has made significant progress in its efforts to become a sophisticated customer-centric airline intent on achieving financial success, by implementing a wide-ranging Turnaround Plan under the leadership of its Board of Directors with the unstinted support of its employees across all divisions.

Following the appointment of a new Board of Directors in April 2018, the majority on an honorary unrecompensed basis, SriLankan began implementing a wide range of initiatives to curtail losses and improve the customer experience, despite many challenges including the impact on tourist arrivals from the Easter Sunday attacks, volatile fuel prices and depreciation of the rupee.

The airline will expand its presence in the important Australian market by commencing operations to Sydney next year and further strengthen its position as the largest foreign carrier in India with the launch of services to Ahmedabad. SriLankan also intends to stretch its wings in Southeast Asia with a new service to Ho Chi Minh City (Saigon) in Vietnam, while plans to return to Frankfurt, Paris and other earlier destinations continue to be under consideration.

A considerable effort is being made throughout the organisation in order to provide the most pleasant and user-friendly experience in terms of both products and services, across all customer touchpoints.

Enhancements are being effected to the internet booking engine to provide a more customer-friendly experience. With the introduction of a Customer Relationship Management (CRM) tool, the airline will be able to enhance its offering to the frequent flyer members through FlySmiLes and provide greater rewards for its loyal customers.

One of the first steps that were firmly implemented by the new Board was the restructuring of the National Carrier’s Management Team, with proven experts in the aviation industry being inducted into key positions including those of Chief Executive Officer, Chief Technical Officer, Chief Financial Officer, Chief Commercial Officer and Chief of Service Delivery. With the full support of the staff, the Management Team rolled out multiple initiatives, introducing budgetary controls for all cost lines, inculcating a cost-conscious culture and driving financial acumen across the organisation. However, great care was taken to ensure that the cost optimising did not adversely impact the product and services enjoyed by customers.

This has resulted in the financial performance for the six months ended September 30, 2019, showing an upward trend by reducing losses by more than 50%, with a loss of $19 million before interest and withholding tax against a loss of $39 million for the same period in the previous year. After interest and withholding tax, the half-yearly group loss was $76 million, a $10 million improvement over the $86 million loss in the previous year.

Savings in the area of engineering and maintenance for the aircraft fleet have been significant, and a cost reduction of $8 million was realized in 2018/19, with a further $23 million earmarked for 2019/2020. There has also been a noteworthy improvement in fuel performance of the NEO aircraft fleet. An important revenue stream was re-established with SriLankan Engineering, the airline’s aircraft maintenance arm, regaining its Type-145 global certification from the European Aviation Safety Agency (EASA) and thus resuming third party maintenance services for customer airlines. This is projected to generate revenue of $1.1 million in 2019/20. Over $2 million in savings were achieved through initiatives introduced pertaining to distribution cost by the Commercial team.

The company also focussed strongly on the importance and user-friendliness of its online direct sales channel and succeeded in increasing its contribution to overall revenue up to 15% from the previous 11%.