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SriLankan airlines crashes

[Lakbima News, Monday, 28 September 2009 08:28 No Comment]

An internationally reputed Audit firm, Ernst Young has shown in their audit report, (page 31 of the Final Accounts) how a profit of Rs.4, 420 million in 2008 has now turned to a Rs.9305 million loss for this year, for SriLankan airlines.

Accumulated loss of the national airline, stands at of Rs.18.06 million from an accumulated profit of Rs.9,288 million in 2008, an audit report has revealed. This is entirely due to mismanagement in the current year, and the airline is now so precariously placed, only one alternative remains — closure.

A carried forward loss has been posted for the first time in ten years, according to the report.

The company’s current liabilities are Rs.25,012 million and the current assets are Rs.16,852 million, resulting in liabilities exceeding assets by Rs.8160 million, which shows the precariousness of the financial situation of the airline. This kind of revenue picture points towards only one outcome —- the airline will very probably have to close down.

The total assets have reduced from Rs.47,942 million in 2008 to Rs.34,341 million —— resulting in a loss of total assets by Rs.13,599 million, even after revaluation of certain capital items.

One of the most alarming factors is that the total equity of the Company as per the Balance Sheet has deteriorated to Rs.6, 230 million from Rs.15,336 in 2008.

There is a contingent liability of Rs.431.6 million for the hedging contract for oil which has not been taken into account for this year, the report says.

A fixed deposit of Rs.6856 million has dissipated during the year, giving rise to the fear that the 12 aircraft that are on operating lease may embarrassingly be seized due to breach of contract —— whereby the Sri Lankan Limited., needs to maintain a minimum cash in hand for the operative lease to be in force.

When UNP leader Ranil Wickremesinghe, Chief Opposition Whip Joseph Michael Perera and UNP MP Ravi Karunanayke attempted to question the government about the sorry situation of the airline, the government did not allow questions on various pretexts.

In the presentation of the final accounts, the Chairman and the CEO have made many fanciful statements that the Airlines is moving towards planet friendly flights, using the Motto “Earn, more, spend less and waste not”

Repeated attempts to contact Sri Lankan officials and Aviation Minister Chamal Rajapaksa failed.

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