Sri Lanka is currently looking at travel bubbles with the UK, Singapore and China, SriLankan Airlines Chairman Ashok Pathirage stated.
“We have thought about travel bubbles between the UK and Sri Lanka and probably Singapore and Sri Lanka. Because there is a lot of travel happening between the UK, Singapore, and also China. So, these are the 3 countries we are looking at. At the same time, the Singapore airport is still pretty much closed, and the UK is strictly following quarantine procedures. In that context, we are currently engaging through our foreign missions,” Pathirage said during an interview with Bloomberg Markets Asia.
Speaking further Pathirage stated that the airline has seen a 75% drop in turnover due to the COVID-19 pandemic, However, he expressed optimism that the organization will be in better shape post-COVID, as compared to most of the larger airline companies.
“In terms of turnover, we are about 75% down. It is really bad. Hopefully, if things get better, the government will plan to open the airport because Sri Lanka is somewhat dependent on tourism. We had about almost 4% of our GDP coming from tourism. At the moment that is almost zero. These are the challenges that we are facing. We have taken many measures, just like the other Airlines we have taken a lot of initiatives to reduce our costs. We have renegotiated with our lessors. So, I think we have been somewhat successful in all those initiatives. We have reduced salaries for our employees, we have given pay cuts and we are planning to have a volunteer retirement scheme (VRS). These are the measures that we have taken,” he said.
“We had a total of 7,000 staff pre-COVID. Now we have brought it down to 5,000, but that, too, is still high with the current operations. We are taking all measures to make it a leaner organization. In a way, this is also a great opportunity for Sri Lankan Airlines. We have reduced a lot of our costs and especially in terms of the belittling cost, we have been very successful. We have managed to reduce the leasing cost by about 18%. That means these are the least cuts, rental cuts. I would say that we have almost saved about $100 million per annum. So, I think we have basically restructured the organization and it is still ongoing. There is more work to be done. So, I think we might be in a much better shape when things come back to normal. I think we can be hopeful of profit-making or at least break-even level. So, I think this is in a way a blessing in disguise. Not that we hope this situation to continue. Hopefully, things can come back sooner than later, he added.
Meanwhile responding to a query that if SriLankan Airlines was still going ahead with plans to lease A350 or A330 aircrafts, Pathirage stated it was a pre-COVID decision.“In today’s context, we don’t even need 30% of our fleet. We are negotiating with Airbus to see what the best option for us. but, at the moment, we are not in a position to tell what it is going to be,” he said.
“The current government thinking is right, not to privatize or not to sell off part of the company. We are not engaged in any such activity. It is not the thinking of the shareholders. We are also dealing with $ 1 billion debt, which we owe to the government banks. We have raised money through International Bonds. We are talking to the Government on how some of the debt can be converted into equity to reduce our burden on interest costs. The Government has been very helpful to the organisation, and we are confident they will support us till we overcome this phase,” he added.
He also noted that SriLankan Airlines is taking all possible measures to trim its expenditure to be a lean organization.
“I don’t know whether this social distancing is really going to take place inside the aircraft. Because that is going to be a major hit for everybody. Although we may not expect the revenues to return to the same as the pre-COVID era, we have taken measures to reduce our costs and be a lean organization. We may be in a much better position to turn into profitability, maybe not immediately, but at least in two years. We can get into there and if the government is willing to support in converting part of the debt into equity.”
Note: Travel bubbles, also known as travel corridors and corona corridors, are essentially an exclusive partnership between neighboring or nearby countries that have demonstrated considerable success in containing and combating the COVID-19 pandemic within their respective borders. These countries then go on to re-establish connections between them by opening up borders and allowing people to travel freely within the zone without having the need to undergo on-arrival quarantine.
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Author: Isma Izzath
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