Untitled - SriLankan Airlines

110 Pages·2014·19.2 MB·English

116
SriLankan Airlines Annual Report 2013/14
Contents
Highlights 005
Chairman’s Message 006
Chief Executive Officer’s Review 010
Stewardship
Profiles of the Directors 016
Key Members of Management 017
Management Discussion and Analysis
Operating Environment 019
Goals and Strategies 022
Financial Performance 023
Customers 026
Employees 038
Social and Environmental Responsibility 041
Financial Reports
Annual Report of the Board of Directors 048
Board Audit Committee Report 051
Statement of Directors’ Responsibilities 052
Independent Auditor’s Report 053
Statement of Financial Position 054
Statement of Income 055
Statement of Comprehensive Income 056
Statement of Changes in Equity 057
Statement of Cash Flow 058
Notes to the Financial Statements 059
Annexes
Ten Year Review 099
Route Map 100
Milestones 102
Glossary 103
Notice of Meeting 104
Form of Proxy Enclosed
Corporate Information Inner Back Cover
001
Annual Report 2013/14 SriLankan Airlines
context
SriLankan Airlines belongs to the community of full service, international
airlines operating around the world today. Analysis of global aviation
over recent times reveals that almost every airline in this community is
struggling to post adequate returns. They have reduced costs and improved
product significantly over the years but have passed these benefits on to
the customer often at the expense of margins.
This is the context within which airline performance and
profitability need to be assessed.
We have put in place a 5 year business plan that is focused primarily
on moving the airline towards profitability whilst continuing to deliver
greater economic returns to the country.
This then is the context within which SriLankan
will operate and be evaluated, in the coming years.
002
SriLankan Airlines Annual Report 2013/14
Our Vision
To be
the most
preferred
airline
in Asia
Our Mission
We are in the air transportation business. We provide our
customers with a reliable and pleasant travel experience.
We provide our business partners with a variety of innovative,
professional and mutually profitable services. We meet Shareholder
expectations of profitably marketing Sri Lanka and contributing
towards the well-being of Society. We are a competent, proactive
and diligent team. Our contribution is recognised and rewarded.
003
Who We Are Annual Report 2013/14 SriLankan Airlines
SriLankan Airlines, the National Airline of Sri Lanka was founded in 1979. It is an award-winning carrier reputed for
its world-leading standards of service, comfort, safety, reliability and punctuality. The airline’s hubs are located at
Bandaranaike International Airport in Colombo and Mattala Rajapaksa International Airport, Hambantota;
providing convenient connections to its global route network of 89 destinations in 44 countries in Europe,
the Middle East, South Asia, Southeast Asia, the Far East, North America, Australia and Africa. SriLankan Airlines
is a fully fledged member of the oneworld alliance of global airlines.

005
Annual Report 2013/14 SriLankan Airlines
Highlights
Group Company
2014 2013 2014 2013
(Restated) (Restated)
Financial
Revenue LKR Mn. 124,154.62 121,407.66 121,585.83 119,570.90
Operating Expenditure LKR Mn. 150,393.31 146,834.36 150,389.46 146,700.24
Loss Before Tax LKR Mn. (31,297.64) (26,842.36) (32,357.98) (26,088.57)
Net Loss for the Year LKR Mn. (31,365.83) (26,857.60) (32,408.34) (26,088.57)
Total Assets LKR Mn. 65,386.97 81,184.77 62,366.70 78,243.50
Shareholders’ Funds LKR Mn. (51,678.69) (41,437.51) (57,220.95) (45,972.79)
Traffic
Passenger Capacity ASK Mn. 15,780.54 15,944.31
Overall Capacity ATK Mn. 2,187.18 2,186.96
Passengers Carried RPK Mn. 12,810.95 12,968.74
Overall Load Carried RTK Mn. 1,466.74 1,513.70
Passenger Load Factor % 81.18 81.34
Overall Load Factor % 67.06 69.22
Breakeven Load Factor % 84.07 87.03
Staff Productivity
Average Strength Nos. 7,475 7,241 6,578 6,359
Revenue per Employee LKR Mn. 16.61 16.77 18.48 18.80
Value Added per Employee LKR Mn. (3.55) (2.73) (4.33) (3.13)
Aircraft Fleet
A320/1-200 Nos. 8 8
A330-200 Nos. 7 7
A340-300 Nos. 6 6
Turbo Otter Nos. – 1
Aircraft in Service at Year End Nos. 21 22
006
SriLankan Airlines Annual Report 2013/14
Chairman’s Message
As a full service, international
airline and the National
Airline of Sri Lanka, SriLankan
Airlines supports the brand
Sri Lanka. We have the
infrastructure, products and
services in place to provide a
vital gateway to Sri Lanka.
I am pleased to welcome you to the An aspect which we endeavour to picture of the challenges, triumphs and
36th Annual General Meeting of address through this report concerns failures your airline faced during the year
SriLankan Airlines and to place in your context and perspective. SriLankan in review.
hands the Annual Report and Audited Airlines is often viewed through the
Financial Statements of the airline for prism of profitability. This is eminently Within this context therefore, I will now
the financial year 2013/14. understandable as expectations, provide you with details of the airline’s
particularly of a State-owned performance and its role in the greater
During the year in review, your airline organisation are high. However, the scheme of things vis-a-vis the Nation, its
took several strategic initiatives that refracted vision emanating from this people and their aspirations.
will shape and drive our enterprise and ‘prism’ alone really does not do justice
performance in the coming years. to the scope and substance of the
Key Performance
airline’s enterprise and achievements.
Of vital importance to our progress is This report contains material to help Highlights
the adoption of a new five year business place SriLankan Airlines in context with
The airline earned revenue of
plan. This plan embodies the strategies industry trends and results.
LKR 121,585.83 Mn. for the fiscal year
and actions that will be needed to
2013/14, an increase of 2% over the
improve profitability and achieve The other development this year is the
previous year’s LKR 119,570.90 Mn.
healthier margins, whilst continuing to commencement of an evolution in our
generate greater economic returns to annual reporting format, which seeks to
the country. present a clearer and more contextual
007
Chairman’s Message Annual Report 2013/14 SriLankan Airlines
008
SriLankan Airlines Annual Report 2013/14 Chairman’s Message
Our operating expenditure reached airlines, and is confident of attracting Sri Lanka in aiding the gamut of
LKR 150,389.46 Mn., an increase of several more during the next financial activity that must ensue as these
3% over the previous year’s year. SLC also invested in a new flight hubs come into being.
LKR 146,700.24 Mn. kitchen which is under construction
at MRI. Of course our direct impact is to be
Passenger capacity, number of seen in the aviation sector.
passengers carried and load factors In addition to its core business of airline
maintained parity with last year’s levels. catering SLC has a diversified business SriLankan Airlines accounts for over
portfolio which includes; operating 50% of passenger travel into and out of
However, the airline’s net loss increased Transit and Public Restaurants at BIA Sri Lanka. Our operations bring gainful
to LKR 32,408.34 Mn. for the period and MRI, management of and catering profit right across the industry supply
under review, compared with a net loss to airport lounges, managing the airport chain, benefitting airports, hotels,
of LKR 26,088.57 Mn. recorded the Transit Hotel at BIA, provision of Laundry travel agencies, freight forwarders
previous year. Services (Aero Clean), Local Catering among others.
(Vanilla Pod) and operating the Semondu
This loss is attributable to an increase in Restaurant in Colombo. We are an integral stakeholder in the
aircraft maintenance and overhaul costs country’s tourism sector.
caused mainly by mandatory aircraft SriLankan Catering added to the Group’s
modifications and expenses related to growing reputation for excellence by Sri Lanka’s growing economy and rapid
return of aircraft, which amounted to winning prestigious awards during the development have been key catalysts for
LKR 2 Bn., as well as an escalation in year. SLC remains one of the few Airline the growth of tourism. Tourists arrivals
finance expenses which amounted to caterers to possess triple certification at 1.3 Mn grew by 27% as at December
LKR 6,197 Mn. (which includes during the year under review and 2013 and we are well on track to achieve
LKR 2,100 Mn. attributed to the loss on successfully completed audits to the target of 2.5 Mn. visitors by 2016.
Sale of Treasury Bonds) compared with upgrade its quality management Total revenue from tourism up to
LKR 3,138 Mn. the previous year. standards. SLC is a member of the December 2013 reached USD 1 Bn.
International Travel Catering Association
of (ITCA) and the Flight Food Service Despite this growth in visitor numbers,
Performance of the
Association of the United States and the we feel that the sector remains
Subsidiary - SriLankan flight kitchen is halal certified. underdeveloped in comparison to
Catering Limited (SLC) other countries in the region. This is
an opportunity that industry, airline
The Group’s fully owned subsidiary, SriLankan
and Government can seize and turn to
SLC, continued to provide strong and Sri Lanka singular advantage.
financial support for the Group during
the year under review and achieved The focal point of the national
SriLankan Airlines’ contribution to the
an impressive profit after tax of development thrust is the establishment
national interest stretches far.
LKR 2.3 Bn. compared to profit after of Sri Lanka as a strategically important
tax of LKR 1.4 Bn. reported in previous economic centre of the world. This, the
Our membership, just attained, in the
financial year. This was the eighth time in country hopes to attain by developing
prestigious oneworld global airline
the past that SriLankan Catering crossed into Maritime, Aviation, Commercial,
alliance has significantly expanded our
LKR 1 Bn. in profit after tax. Tourism, Energy and Knowledge hubs -
reach and offer with access to more
a strategically important link between
than 900 destinations operated by our
SLC specialises in providing Inflight the eastern and western hemispheres.
alliance partner airlines across the globe.
catering services to airlines that operate
This is a quantum leap in enhancing -
to Bandaranaike International Airport SriLankan Airlines as a full service,
access to more places around the globe
(BIA) and Mattala Rajapaksa International international airline and the National
for the international traveller as well as
Airport (MRI). SLC signed new Airline of Sri Lanka, has the
the country’s image and standing as it
agreements during the year to provide infrastructure, products and services
develops the aviation hub concept.
catering services to several international in place to provide a vital gateway to