By Rajeewa Jayaweera –
The Recent Media Release by SriLankan Airlines (UL), uploaded in its website www.srilankan.com and extensively published in the print media contains some startling figures.
The national carrier, for management accounting purposes, computes its Revenue, Expenditure and Profitability/Losses in US Dollars. The US Dollar figures are then converted into Sri Lanka Rupees for reporting purposes as required by the law of the land.
The media release stated among other things;
1. The airline’s net traffic revenue from core airline operations increased to USD 746 million (Rs 120 billion) representing an 8% growth over the same period last year.
2. At USD 902 million (Rs 147 billion), the total operating cost recorded an increase of 15% against the previous year.
3. The net loss for the nine months was reported as USD 135 million (Rs 40 billion) against the loss for the corresponding period of the previous year was at USD 66 million (Rs 11 billion).
The conversion of the net loss for the period under reference of USD 135 million to Rs. 40 billion represents an exchange rate of Rs. 296.30 per USD 1. This appears to be a significant error.
As per the CBSL opening rate for 01 April 2018 and closing rate at 31 December 2018, the average exchange rate amounts to USD 1.00 = Rs 168.12.
If the figure of USD 135 million is accurate, then the Rupee loss would amount to Rs 22.5 billion.
If the figure of Rs. 40 billion is accurate, then the USD loss would amount to USD 238 million.
The average exchange rates used in the press release are as follows:
1. Revenue of USD 746 million / Rs 120 billion, USD 1.00 = Rs 160.86.
2. Operating Cost of USD 902 million / Rs 147 billion, USD 1.00 = Rs 162.97
3. Net Loss for 9 months ended 31st December 2018 of USD 135 million / Rs 40 billion, USD 1.00 = Rs 296.30
4. Net Loss for 9 months ended 31st December 2017 of USD 66 million / Rs 11 billion USD 1.00 = Rs 166.67
Therefore, it is apparent that there is a significant error in the Net Loss figure reported for the 9 months ended 31st December 2018.
The average exchange rate used for converting the Net Loss for the previous year at Rs. 166.67 is also incorrect.
It appears that there has been a lack of diligence in the reporting of the figures mentioned above which is a significant cause for concern in an enterprise that is a burden on the taxpayers of this county.
While there have been certain improvements reported in terms capacity utilization, market yield, and unit cost, etc., the end result is that the Loss at the National Airline has significantly increased despite efforts by management to portray a rosy picture through the media release. It has failed to even achieve a surplus in its core business of Carriage of Passengers, Cargo, Mail, and Charters during the period under review.
These are losses that the taxpayers of this country need to bear.
Finally, it is a matter of great concern that SriLankan Airlines has to date, failed to publish its Annual Report for the financial year ending 31 March 2018 in contravention of Company Law Act Article 167. What is the cause for this delay when a significant number of companies listed on the Colombo Stock Exchange release their Annual Reports within 3 months of the end of the Financial Year?
The Board of Directors and CEO owe the taxpayers an explanation.
Rohan / February 3, 2019
The politicians and state officials who are responsible for this, and all of them at Sri Lankan airlines should be brought to Galle Face Green, and publicly stoned to death for causing so much pain and harm to the people, and for neglecting their responsibilities and leting this monster to uncontrollably bleed the public coffers. Else shut down the damp thing for good, and let the public have a break.
Amarasiri / February 3, 2019
All those losses started happening only AFTER Mahinda Rajapaksa and crooks entourage was prevented/allowe to kick out paying passengers from the plane, and the resulting fall back from the Emirates Airlines. Since then, the Airline has lost a total of close to US $ 1 Billion, instead of a profit of $ 1 Billion.
What does the BP Sirisena, the Traitor, Quisling, Sevalya, Mala-Perethaya, Pachaya etc. corrects the problem? Carry out an illegal and unconstitutional coup and appoint BP Mahinda Rajapaksa , as the Fake PM, overturned by the Supreme Court.
Sri Lanka, a Land like no other, occupied by Paras with a mean IQ 79.
Hold on to your dollars. Pretty soon you can get Rs. 300 to the dollar.
JD / February 3, 2019
Rajeewa Jayaweera: Mahinda Rajapakse allowed it to run as his private Jet. Ranil did not change it. UNP increases it to 7000 employees. I here, there are 24 planes and not all are airworthy. they leased airplanes and they are sitting in hangers but not used. At least 190 people who earrns Rs one million each from a money losing air line. Ranil appointed two teams of upper management and HE is silent. they all are busy with the next term of the govt. Sri lankan media do not inform these to the rural people or even to sinhala only urbanites. So, the corrupt politicians win again. It is not run as a business but just as a Place to provide jobs.
UKCitizen / February 3, 2019
If you look at the annual reports they are no longer signed off by an accounting company.
The only reason that makes any sense is that the financial statements are fictitious.
I suspect the financial situation is much worse than is being reported. Just look at all the things being revealed by the CoI hearings – nothing would surprise me.
A Culture of Impunity and Zero Accountability!
I suggest you contact the CoI with your findings and suggest they do a full financial audit of the Airline.
Rajeewa Jayaweera / February 3, 2019
Audit Reports are no longer signed off by an Audit Company because it is a requirement of the 19th Amendment for State Owned Enterprises(SIEs).
The audit is carried out by private audit companies (I believe govt. nominated but not sure) but validated with an Audit Report from the Auditor General.
UKCitizen / February 5, 2019
@ Rajeewa Jayaweera
Thanks for the explanation – Government auditing the Government sounds like Conflict of Interest to me. This is a concern in a lawless country were the Rule of Law is completely absent.
It has just emerged that the costs for leasing an A330-200 that SrILankan took as part of the settlement for the cancellation of the first A350 order were not included in the financial statements. See the latest news from the CoI.
It makes me wonder what else is hidden/not being reported?
I would not trust the accuracy of any financial statements released by SriLankan.
K A Sumanasekera / February 3, 2019
At the current rate of depreciation, it won’t be long before the Yahapalana Ruppiah drops to 300 a piece against the USD.
I am sure the Bean Counters who did the report know something about FX .
And must have read the forecasts of the experts who specialize in South Asian currencies..
Suren / February 3, 2019
Rajeewa, the rupee amounts are correct although they seem to have made a mess of the USD conversions. After all the airline is now run by an Accountant
Spring Koha / February 3, 2019
SriLankan airline figures are now reported in monopoly money anyway. These numbers are for government use mainly, and for them anything goes. Why do you think nobody seriously came forward to buy the airline. Nobody would touch it even with a barge pole. When due diligence was carried out, the answer was run-a-mile from this pile of shit. Even naming names is a waste of time.
Julampitiye Amaraya / February 3, 2019
Maybe It was converted through Black markets. So the thieves can pilfere more and hoodwinks the people. Mun serama Kamba HORU.
K.Pillai / February 3, 2019
Rajeewa Jayaweera points out that the Board of Directors and/or the CEO of SriLankan Airlines have to date, failed to publish its Annual Report for the financial year ending 31 March 2018 in contravention of Company Law Act Article 167.
We, layLankans know the Airlines has not been managing the finances properly. An Annual Report will be meaningless.
Recent leaks by the PCoI on SriLankan show the tip of the iceberg of the unbelievable decay in all aspects of management.
Mason / February 3, 2019
Sell this damn airline and close shop so that poor people of the country will not be burden anymore or hand over the airline( after government taken on or writes off the current loss) to us – former set of senior managers ( who were never politically influenced during our times at all) to get this airline out of this situation.
We would like to remain unknown but willing to meet aviation minister/PM and board of directors of the airline to seriously offer our expertise without a cost for a year.
Once its back on track, then hand over to people who would be capable of running it then profitably.
Fathima / February 3, 2019
If the Govt can appoint and foreign CEO and the management particularly from EU/US (someone like Peter Hill, I believe he is still living in SL) is good. Give them the driving seat, not as independent consultant under a local leadership.
During their management, we were crying on their expenses and salaries, while they ran the airline profitably. Now, we are crying not on management expenses, but on losses and corruption. Repeated failures show, we the Sri Lankans, are not yet ready to run an international carrier profitably.
K.Pillai / February 3, 2019
SriLankan was gaining reputation during the time under Emirates management. A niche in aviation was very near.
Then one day MR, on a private visit to London, demanded the Airline to offload 30 passengers and fly him and the entourage home. The then CEO Peter Hill could not comply. He was sacked. Emirates packed their bags.
Without batting an eyelid, MR appointed his brother in law Nishantha Wickremasighe to Chair the Board of Directors of SriLankan Airlines. Rest is history and Rajeewa knows.
PS: Remember the 26 October happening? MR was appointed PM which lasted just a few days. MR appointed the same Nishantha to the old job.
It lasted one day!
Douglas / February 3, 2019
The first time, this “Loss” of “Rs 40 billion” came to light through the COPE Reported to Parliament by it’s Chairman , MP Mr. Sunil Handinetthi. Having granted that the “COPE” comprised of very responsible MPs, I am inquisitive to find out, WHY , they could not find out the “Difference of US$ 135 Million ” equals to Rs. 40 Billion, before stating that in their “Report”. If, they (the COPE) members questioned those who appeared before them as to the “conversion” of the currency rate or worked it out on their own, this “Error” or “Misrepresentation” would have been avoided. That indicates to me, even this “Body” called “COPE” is also not functioning “Diligently” and “Responsibly” in the interest of the Public. There is one more SALIENT factor, the COPE and other Public Interest Groups have forgotten to QUESTION and that is: – The Net Revenue reported an “Increase of 8%” while the Operating Costs showed an “Increase of 15%” a difference of 7%. HOW was that possible? How DID or on what ACCOUNT that happened? Have the COPE Members inquired or investigated into that aspect and reported? I feel, that should be the “WAY” an investigation or a Fact Finding Mission must be carried out by any “Responsible” body, in order to change the course of this outfit to be a viable “Business” unit. It is very easy to blame, but to take corrective measures is the HARDEST and most UNPOPULAR; yet that NEEDS to be done in the public interest and welfare.