SriLankan CEO believes ‘worst is over’, expects $50 mn profit next year

Sri Lanka’s national carrier is  expecting a profit of USD 50 million for the upcoming year, SriLankan Airlines CEO Richard Nuttall revealed, adding that he also expects passenger traffic to surpass pre-COVID levels by the end of 2023 owing to the ‘economic boom’ in tourism.

In an interview with Channel News Asia (CNA), Nuttall said that he expected a ‘stronger outlook’ for next year, with matters gradually returning to normalcy in terms of the country’s economy and its tourist arrivals.

“Assuming that the world stays the same for the year ahead, which we expect, and the Sri Lankan economy is rebounding, tourism is coming back, we’re forecasting perhaps a 50 million profit next year”, he said in this regard.

Speaking on the impact Sri Lanka’s economic crisis has had on the loss-making airline, Nuttall explained that while they were initially faced with a challenge at the start of 2022, owing to the severe dollar crisis Sri Lanka was facing at the time, the airline later got through it by around September that year.

Moreover, he also noted that albeit several persons and industries were affected by the Sri Lankan currency’s devaluation, SriLankan Airlines remained mostly unaffected.

“The currency devalued, that’s been a challenge for many people in the country. But actually for the airline it doesn’t really matter, because in practice 80% of our revenues come from overseas and actually even in the country the underlying fares are set in dollars. So, we are somewhat protected against currency moves”, he explained.

Commenting on the restructuring of SriLankan Airlines and a solution for servicing its debts, Nuttall spoke of the potential privatisation of the institution owing to the Sri Lankan government’s decision to no longer fund inefficient State-Owned Enterprises (SOEs), a decision Nuttall believed was taken in a bid to absolve from liability.

He emphasised however, that the national carrier has not received any funds from the government for nearly two years, adding that almost 10% of their revenue went towards paying ‘unsustainable’ interest rates between 12% - 15% on dollar debt that “had nothing to do with the airline”.

When questioned on the potential privatisation of the national carrier and if any offers have been received thus far, Nuttall explained that he remains unaware of this, as the process in this regard has not yet called for their involvement in the matter.

“We’re not managing it, the Government’s managing it. But we expect, at some time in the process, that they will ask for expressions of interest and then we’ll see. Do we get a good partner that works? Maybe. Maybe not”, he said.