Mr Chandrasena told CAPA at the Malaysia Airlines (MAS) oneworld joining ceremony in Kuala Lumpur on 31-Jan-2013 that the carrier is looking at adding non-stop flights to Hong Kong and launching services to Seoul via Hong Kong. Both would be significant developments as Hong Kong is not currently linked to Colombo on a non-stop basis and there are currently no direct flights between South Korea and Sri Lanka. Korean Air (KAL), however, is planning to launch on 09-Mar-2013 three weekly A330 flights from Seoul to Colombo with continuing service to Male in the Maldives, opening up a market SriLankan is also keen to tap.

* Expects at least $134.8 mln loss in FY 2012/13

* Last year's loss hit record on Europe, fuel costs

* State plans $500 mln investment over five years

* Airline plans borrowing to make up shortfall

By Shihar Aneez and Ranga Sirilal

COLOMBO, Feb 26 (Reuters) - Loss-making Sri Lankan Airlines hopes a five-year plan to fly to more profitable destinations and invest in a more fuel-efficient fleet will help it break even in 2015/16, its chief executive said.

Airlines worldwide have been hit by rising fuel costs which bite into profitability, and state-run Sri Lankan has the extra burden of having to operate unprofitable European routes, because the country's economy, hard-hit by the 26-year war that ended in 2009, relies heavily on tourism.

The national carrier, which was managed by Dubai's Emirates airline for the ten years to 2008, made a record loss of 17.18 billion rupees ($134.8 million) in the 2011/12 financial year, from a loss of 202.3 million rupees a year ago.

"I feel the loss is going to be somewhere around last year or even more because we just introduced more capacity," chief executive Kapila Chandrasena told Reuters in an interview.

"The main reason for the loss is we were operating a network where certain regions were making losses, especially Europe, which consisted of 60 percent of last year's total loss."

Last year, half a million tourists visited the island from Europe, fuelling an industry worth $1 billion.

The airline operates about 253 flights a week out of Colombo to European, Middle Eastern and Asian destinations, using a fleet of 22 aircraft. With half the airline's costs spent on fuel, ageing, inefficient planes have also hit profit, he said.

The company now wants to add routes to more profitable destinations, and gradually replace its fleet with newer, more fuel-efficient aircraft.

FIVE-YEAR STRATEGY

Chandrasena said under a five-year strategic plan the company would add more routes to India and East Asia to take advantage of rapid economic growth there. The Middle East is also important because of the hundreds of thousands of Sri Lankan migrants working there.

Sri Lankan has already added three new Airbus A320-200, two A330-200s, and one A340-200 to help boost the fuel-efficiency of its fleet. It now has seven A320-200s and seven A330-300s, six A340-300s and two Twin Otters.

"Our plan is to look at, by 2023, having a next-generation fleet of aircraft which are mainly twin-engine fuel-efficient aircraft so that's a progressive replacement over ten years. Initially it'll start with six aircraft in phased-out manner."

The airline, which is 51 percent state-owned, is not planning to increase capacity in the next four years, Chandrasena said, adding that he hoped it would break even, or be close to that point, in the 2015/16 financial year.

However, government plans to invest $500 million over five years, with $100 million per year through 2016, will leave a shortfall for implementing the turnaround plan, Chandrasena said, as the airline needs that funding within three years.

"There is a gap. So we will look for a bridging facility," Chandrasena said. "This year, the plan is to have $140 million. So the plan is to borrow $40 million subject to certain approval. We want to look at the international market."

Last year, it completed a $175 million sharia-compliant four-year loan facility with Abu Dhabi Islamic Bank, Abu Dhabi's Al Hilal Bank, Mashreqbank, Dubai's Noor Islamic Bank and United Bank Limited for additional capital. ($1 = 127.4000 Sri Lanka rupees) (Writing by Shihar Aneez; Editing by Helen Massy-Beresford)



same old spin with blaming the fuel cost...Even CEO is not sure if he could break even by 2015/16...The losses are only going to exacerbate with starting operation to mattala

I hope he at least he try to understand how the JAL CEO or southwest CEO operates http://www.youtube.com/watch?v=PjeTTQKRfWU

President keen on re-fleeting Mihin with US-made Boeing
February 26, 2013, 9:09 pm

By Harischandra Gunaratna

The government has decided to do away with Airbus and re-fleet its budget carrier Mihin Lanka with Boeing in the near future.

Civil Aviation Minister Priyankara Jayaratne said that President Mahinda Rajapaksa has expressed his keenness on purchasing the US manufactured Boeing in preference to the existing Airbus for Mihin Lanka.

The Mihin fleet consists of three A-320 aircraft taken on lease at the moment.

In an interview with The Island Financial Review Jayaratne said, "The three airbus in the Mihin fleet will be shifted to Sri Lankan Airlines after the Boeing aircraft is delivered and soon Cabinet approval will be sought before calling of tenders".

Aviation sources said the government was likely to go for Boeing’s proven mid-range workhorse 777.

A few years ago Boeing even put on a full sales pitch in Sri Lanka with a well organised show at the Colombo Hilton.

"It is imperative that Sri Lankan Airlines undergoes modernisation as soon as possible and possess a fleet of brand new aircraft as 51% of the losses incurred by the national carrier were on fuel as the existing fleet possess a number of obsolete aircraft guzzling fuel," the minister said.

Asked for the reasons of this sudden change of heart, the minister jokingly said that the government doesn’t want to fallout with America.

Asked when would the first aircraft be ordered, the minister said first Cabinet approval would be sought for the purchase of six wide-bodied A-330s for the National Carrier and added that immediately after delivery of the Airbus for the national carrier, re-fleeting of Mihin Lanka would commence.

The delivery of the brand new Airbus were expected to begin by the end of the year on lease purchase, Jayaratne said.

When asked about the cost of the aircraft he said "We cannot arrive at a figure as tenders have not been called yet."

The budget carrier will be revamped to serve more efficiently, Jayaratne said.

"Many thousands of Sri Lankans who could only dream of visiting the key Buddist sites in India have already visited them and the loans on easy payment terms organised by different banks were a boon to millions of pilgrims with the advent of Mihin Lanka," he pointed out.

The Minister said that certain travel agents organising pilgrimages to India fleece the ignorant public through devious means and the government would be keeping a close tab on such agents, the minister said.

Last year, an Auditor General’s report highlighted the extent of Mihin’s financial plight.

The budget airline sustained a loss of Rs. 3.1 billion in 2007/8; Rs. 1.3 billion in 2008/9; Rs. 1.2 billion in 2009/10; Rs. 940 million in 2010/11 and Rs. 1.9 billion in 2011/12.

Grants from the Treasury amounted to Rs. 507 million in 2012; Rs. 406 million in 2011; Rs. 1,508 million in 2010; Rs. 2,882 million in 2009; Rs. 500 million in 2008 and Rs. 250 million in 2007.





Hopefully they mean 737s for Mihin.

SriLankan Airlines focuses expansion on Asia as it prepares to join oneworld

SriLankan Airlines is planning to focus expansion on existing and new markets in Asia ahead of the carrier’s ascension into the oneworld alliance. SriLankan is now on course to formally become oneworld’s member in Nov-2013.

The carrier is currently focused heavily on South Asia, which accounts for 41% of its international seat capacity. SriLankan’s network in South Asia, particularly India and the Maldives, is its main draw to oneworld. But North Asia is SriLankan’s target growth market, with more capacity to greater China and launch of flights to South Korea.

SriLankan’s North Asia expansion could be boosted by a relationship with Cathay Pacific, which is sponsoring SriLankan’s membership into oneworld.

SriLankan’s North Asian network currently includes the three largest cities in mainland China – Beijing, Guangzhou, Shanghai – as well as Hong Kong and Japan - Tokyo. Only Tokyo is served non-stop from SriLankan’s Colombo hub while the other four cities are all served via Bangkok.

Northeast Asia currently accounts for 7% of the carrier’s seats, compared to 41% to South Asia, 22% to Southeast Asia, 19% to the Middle East and 12% to Europe. But SriLankan CEO Kapila Chandrasena says “the Far East is where our growth is”.

SriLankan international capacity (weekly seats) by region: 25-Feb-2013 to 03-Mar-2013

SriLankan looks to launch service to Seoul via Hong Kong

Mr Chandrasena told CAPA at the Malaysia Airlines (MAS) oneworld joining ceremony in Kuala Lumpur on 31-Jan-2013 that the carrier is looking at adding non-stop flights to Hong Kong and launching services to Seoul via Hong Kong.

SriLankan currently serves the Hong Kong-Colombo market with three weekly flights via Bangkok using A330s and A340s. Cathay Pacific serves the market daily using 777s, with four weekly flights via Singapore and three weekly flights via Bangkok.

SriLankan top 10 routes ranked by capacity (weekly seats): 25-Feb-2013 to 3-Mar-2013

SriLankan’s outlook is bright as it focuses on Asia and prepares to join oneworld

Over the last year SriLankan has been decreasing capacity to Europe in response to the economic downturn. SriLankan dropped service to Zurich in Mar-2012 and service to Milan in Sep-2012, leaving it with service to only five European gateways – London, Paris, Frankfurt, Rome and Moscow. It currently operates one daily flight to London – with up to 12 weekly frequencies operated during the peak northern hemisphere summer season – four weekly flights to Paris, four to Frankfurt, three to Rome and two to Moscow.

The UK continues to be the second largest source for tourist arrivals in Sri Lanka after India, while France is the third largest market. Tourist arrivals from Western Europe were up 18% in 2012 to 373,000 while tourist arrivals from Eastern Europe were up 44% to 72,000 (see background information). But SriLankan continues to see its share of this market decrease due to expansion from the Gulf carriers.

East Asia, where Sri Lanka tourist arrivals were also up by 38% to 133,000, represents a bigger growth market for SriLankan given the stronger economy in Asia compared to Europe and the less intense competition. Asia also represents the more attractive market for traffic to SriLankan’s second home market, the Maldives, given the rapid growth in Maldives tourist arrivals from Asia and the intense competition from Gulf carriers in the Maldives-Europe market.

Sri Lanka’s market overall has rebounded from a period of instability, which concluded in 2009 with the end of the civil war. Total tourist arrival figures were up 18% in 2012 and the country’s economy grew by almost 7% in 2012, following annual growth of 8% in 2010 and 2011.

SriLankan is well positioned to benefit from the continued growth in Sri Lanka’s economy and tourism sector. Meanwhile, membership in oneworld will allow SriLankan to compete more effectively against Gulf carriers to Europe while instantly expanding its global network virtually, allowing the carrier to focus on growth within Asia.

Airbus website doesn't show any pending aircraft deliveries for SriLankan.

they havent even called for a tender yet...

Emirates A380 to use Mattala as supply station

Emirates Airlines plans to use the Mattala International Airport as a supply airport for their modern A380 flights operating on long haul destinations.

The Dubai based airline intends to use the new airport which would open on March18 for refilling and accumulating other essentials for their A380 flights. Minister of Aviation, Priyankara Jayaratne said that this would bring in additional revenue to the airport.



Emirates Moves to All-A380 Operation on Dubai – Sydney Nonstop Service from June 2013

From 01JUN13, Emirates introduces second daily Airbus A380 operation on Dubai – Sydney service. The second daily flight, EK414/415, will replace existing Boeing 777-300ER aircraft. Reservation for the second daily A380 service opened at 0600GMT.

UL Nonstop to HK is a good move.....


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Once in a bluemoon? I don't think these kind of "alternate/emergency" destinations get any fixed income. Instead Mattala may need to maintain all it need and wait for mainly fuel stop. For medical or technical emergency if they can fly to other destination they will not land at Mattala for many years.

it doesn't gulp much fuel, vs other quad engines

a 343, of all, is one of the most efficient of the quad engines

oh, take airlines like CX, for example, were quick to rid the larger brethren of 340s, and did you ever wonder why they didn't rid the 343 ?

apart from the lowest fuel consumption, a 343 also negates the need for ETOPS, which is worth much much more, vs a slightly better twin engine.

let's not get into that anyway ..

SriLankan Airlines link up to Global Explorer

Oneworld members elect Qatar Airways and SriLankan Airlines are to participate in the Global Explorer round-the-world fare offered by all the alliance's members and selected other carriers - Qatar Airways from today and SriLankan from tomorrow.

The move represents a first step by both airlines towards their implementation into oneworld, which is on track for the year ahead - when they will start participating in the full range of the alliance's fares and offering all its other services and benefits.

Their oneworld joining dates will be announced in due course.

Global Explorer is one of two round-the-world fares offered by oneworld. The alliance's other round-the-world fare is oneworld Explorer. This includes travel on the alliance's existing member airlines and affiliates only. Uniquely, prices are based on the number of continents visited, rather than on the distance flown.

Possibly SriLankan may lease Six of the second-hand A330s owned by other airlines, who are planning to replace some A330s in favour of brand-new A333s. The news that lordvader posted also says that the aircraft delivery starts end of this year. So definately it can't be a brandnew order. Wonder Which A330 variant SriLankan going to lease.