Statement from AASL

Clarification on the recent media articles on the loss-making State-Owned Enterprises of Sri Lanka.

We refer to the recent news items, news articles and posts shared in mass media and social media on the above matter.

We have observed that those news items state that 05 main state-owned enterprises (SOE) incur a total daily loss of LKR 7.76 billion and our company, Airport & Aviation Services (Sri Lanka) (Pvt)  (AASL) Limited is also listed as one of those SOEs. These news articles and posts create an impression in the minds of the general public that our company is a state-owned enterprise that is a burden to the state. We categorically state that we are not a burden to the state. We wish to clarify the financial position of our company as follows.

Airport & Aviation Services is a private company fully owned by the government. We provide airport services within Sri Lanka and air navigation services within the assigned airspace conforming to international standards. Our Bandaranaike International Airport has been consistently rated high by “Skytrax”, the international air transport rating organization based in London, United Kingdom (BIA is at the 5^th place of Best Airports category in 2022 by Global Region-Inidan/South Asia). We are employing nearly 4000 employees.

Before the economic downturn triggered by the Easter attack in 2019 followed by the pandemic, we were a profit-making enterprise that regularly contributed large amounts of funds to the state coffers by way of dividends and taxes.  The below table shows our financial position from 2009 up to now.

It is evident from the above table that up to 2019, AASL had been performing exceptionally well. However, due to COVID-19 global pandemic which affected the global aviation sector, international passenger and aircraft movements came down drastically. For example, the passenger movements of Changi airport in Singapore had reduced from 62.9 Mn in 2019/2020 to 1.1 Mn in 2020/2021 while the total revenue had declined from  SGD (S$) 3119 Mn to SGD (S$) 697 Mn.

This global trend had a toll on our finances as well. The total international aircraft movements handled by all airports operated by us came down from 62,195 in 2019 to 20,881 in 2020 marking a decline of 66%. The international passenger movements came down from 9.9 Mn to 2.3 Mn marking a decline of 76%. We should highlight that amidst such enormous challenges posed by the pandemic, we shouldered our national responsibility by keeping our airports operational round the clock, thus facilitating the inflow of vital supplies including the COVID-19 vaccines and the uninterrupted operation of repatriation flights.

Even after facing the COVID-19 pandemic and economic recession, Bandaranaike International Airport, the main gateway, reported a profit of Rs.3,967 Mn in 2021 and Rs.16,715 Mn up to June 2022. The overall operating loss of the company was due to the repayment of the loan installments in foreign exchange on the loans obtained for MRIA. We wish to emphasize that we have continued to manage and sustain our company during these trying times on the meager revenue earned and using our reserves that were prudently built up prior to 2019. Further, we have not retrenched any of our human resources. As a State Owned Enterprise, we have fulfilled our national responsibility by paying dividends and taxes to the Government of Sri Lanka.

The following figures show how the aircraft and passenger movements at our airports have varied over the years.

As clearly illustrated by the above figures, the decline in both passenger and aircraft movements coincides with the global and local events in 2019 and thereafter. As the aviation industry is very resilient to the world economy, health, and political situation, the revenue and profitability of our company are heavily dependent on external factors which are not within our direct control.

We emphasize that the adverse financial situation our company is currently facing is due to these factors and is not a result of mismanagement or poor entrepreneurship whatsoever.

We reiterate that up to now we have not been a burden to the country’s economy or to the taxpayers by any means and we are optimistic that we could regain our position soon with the gradual recovery of the external environment and continue our journey of excellence while contributing to the social & economic progress of Sri Lanka.

 

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