By Rajeewa Jayaweera –
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.