MIRA
INFORM REPORT
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Report Date : |
21.07.2014 |
IDENTIFICATION DETAILS
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Name : |
SRI LANKAN
AIRLINES LIMITED |
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Formerly Known As : |
AIR LANKA |
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Registered Office : |
Sri Lankan Airlines Ltd, Airline Centre, |
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Country : |
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Financials (as on) : |
31.03.2013 (Group) 31.03.2013 (Company) |
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Date of Incorporation : |
11.01.1979 |
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Com. Reg. No.: |
PB 67 |
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Legal Form : |
Public Limited Liability Company – Unlisted (In Operation) |
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Line of Business : |
·
Engaged in operating international scheduled,
non-scheduled air services for the carriage of passengers, freight and mail
as the designated carrier of Engaged in providing third party maintenance, flight
operation services and conducting aviation related training programmes
constitute ancillary activities of the Company Subject is owning a subsidiary company, Sri Lankan
Catering (Pvt) Limited, which is catering to all aircrafts serving |
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No of Employees : |
5900 (Approximately) |
RATING & COMMENTS
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MIRA’s Rating : |
B |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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26-40 |
B |
Capability to overcome financial difficulties seems comparatively
below average. |
Small |
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Status : |
Moderate |
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Payment Behaviour : |
Slow but Correct |
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Litigation : |
Clear |
NOTES :
Any query related to this report can be made
on e-mail : infodept@mirainform.com
while quoting report number, name and date.
ECGC Country Risk Classification List – March 31, 2014
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Country Name |
Previous Rating (31.12.2013) |
Current Rating (31.03.2014) |
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Sri Lanka |
A2 |
A2 |
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Risk Category |
ECGC
Classification |
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Insignificant |
A1 |
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Low Risk |
A2 |
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Moderate Low Risk |
B1 |
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Moderate Risk |
B2 |
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Moderate High Risk |
C1 |
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High Risk |
C2 |
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Very High Risk |
D |
Sri Lanka ECONOMIC OVERVIEW
Sri Lanka continues to experience strong economic growth following the
end of the 26-year conflict with the Liberation Tigers of Tamil Eelam. The government
has been pursuing large-scale reconstruction and development projects in its
efforts to spur growth in war-torn and disadvantaged areas, develop small and
medium enterprises and increase agricultural productivity. The government's
high debt payments and bloated civil service have contributed to historically
high budget deficits, but fiscal consolidation efforts and strong GDP growth in
recent years have helped bring down the government's fiscal deficit. However,
low tax revenues are a major concern. The 2008-09 global financial crisis and
recession exposed Sri Lanka's economic vulnerabilities and nearly caused a
balance of payments crisis. Agriculture slowed due to a drought and weak global
demand affected exports and trade. In early 2012, Sri Lanka floated the rupee,
resulting in a sharp depreciation, and took steps to curb imports. A large
trade deficit remains a concern, but strong remittances from Sri Lankan workers
abroad help offset the trade deficit. Government debt of about 80% of GDP remains
among the highest in emerging markets.
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Source : CIA |
GENERAL
Basic information at a glance
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Name of Subject of Inquiry |
: |
SRI LANKAN AIRLINES LIMITED |
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Legal Form & Status |
: |
Public Limited Liability Company
– Unlisted (In Operation) |
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Chairman |
: |
Nishantha Wickramasinghe |
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Primary Line of Business |
: |
Provide Local and
International Scheduled and Non- Scheduled Air Services for the carriage of passengers,
freight and mail, Air Terminal Services at Bandaranaike International
Airport, and Sale of Duty Free Goods on Board |
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Head office |
: |
Sri Lankan Airlines Ltd, Airline Centre, Bandaranaike
International Airport, Katunayake, Sri Lanka. Tel No: (00 94 19) 733
5555 Fax No: (00 94 19) 733 5122 E Mail: ulweb@srilankan.aero |
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Ticketing Offices |
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Level 3,
East Tower, World Trade
Centre, Echelon
Square, Colombo 1, Sri Lanka. Tel No: (00 94 19) 733
5500 Fax No: (00 94 19) 733 5314 |
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Ticketing Offices |
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No. 28, Devos Avenue Colombo 4, Sri Lanka. Tel No: (00 94 19) 733 3333 Fax No: (00 94 19) 733 5333 |
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No 16 A, Gamini Mawatha, Galle, Sri Lanka Tel No: (00 94 91) 224 6942 - 3 Fax No: (00 94 91) 224 6944 |
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No 17, Temple Street, Kandy, Sri Lanka Tel No: (00 94 81) 223 2495 Fax No: (00 94 81) 22 2494 |
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No. 250, Dock Yard Road, Trincomalee. Sri Lanka Tel No: (00 94 26) 222 1101/ 11 Fax No: (00 94 26) 222 1101 |
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Place of Business/ Operation |
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Colombo Bandaranayake International Airport, Katunayake. Sri Lanka |
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No. of Employees |
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Approximately 5900 |
COMPANY DETAILS
Registration and
Shareholder Details
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Registration No |
: |
PBS
1020 |
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Date of Registration |
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11th
January 1979 |
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Re-registration No |
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PB
67 |
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Date of Re-registration |
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09th
November 2007 |
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Registered Office |
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Sri Lankan Airlines
Ltd, Airline Centre, Bandaranaike International Airport, Katunayake, Sri
Lanka. |
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Board Of Directors As at 09th October 2013 |
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Nishantha Anthony Wickramasinghe |
Chairman |
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Kapila Chandrasena |
CEO |
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Nihal Michael Jayamanna |
Director |
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Shamindra
Punsiri Rajapakse |
Director |
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V.
Manilal Fernando |
Director |
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Lakshmi
Kumari Sangakkara |
Director |
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Sanath
Ukwatte |
Director |
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Chaminda
Susantha Ratnayake |
Director |
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Auditors |
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Ernst &
Young |
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Company
Secretaries |
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Thirukumar
Dalrene Esther Mercy |
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Bankers
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:
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Bank
of Ceylon, National Development Bank, Hong Kong & Shanghai Banking
Corporation, Hatton National Bank Sampath
Bank, Commercial Bank, Nations Trust Bank Standard
Chartered Bank |
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Issued Share Capital
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:
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Rs.
32,032,750,300.00 |
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Nominal Value of Share
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:
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Rs. 100.00 (Total Number of
Shares 320,327,503) |
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Major Share Holders
As at 09th October 2013 |
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Major Share Holders |
No. of Shares |
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Govemment Of Sri lanka |
295,139,476 |
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Bank Of
Ceylon |
12,115,570 |
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People Bank |
4,236,135 |
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National Saving Bank |
4,236,135 |
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Employees Provident Fund |
1,863,676 |
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Others |
2,736,511 |
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FINANCIAL DETAILS
Most recent
available Financial Information
CURRENT
INVESTIGATION
Company Logo
·
History
The Subject Company SRI LANKAN AIRLINES LIMITED is a
Public Limited liability Company incorporated on 11th January 1979 under
registration number PBS 1020 and then the company was re-registered on
09th November 2007 under registration number PB 67.
·
Location.
The Head Office of the Subject Company is
located at Airline Centre, Bandaranaike International Airport, Katunayake.
And approx. 36 kilo meters from Colombo city.
·
Operational Details.
General
The subsidiary
also added the ISO 14001:2004 certification for Best Environmental
Practices to its
Existing
certifications Of ISO 9001:2008 for Quality Management Systems, ISO
22000:2005 for
Food Safety Management
Systems and HACCP-Codex Alimentarius for Food Safety & Hygiene
Airbus A340–300
- 6 aircrafts
Airbus A330-200 - 7 aircrafts
Airbus A320-200 - 8 aircrafts
Awards:
SriLanka has consistently achieved very high
marks for excellence, especially in polls of global travelers. The awards include:
- World’s
Best Airline in a survey of Economy Class passengers
- World’s
Friendliest Cabin Staff - Skytrax
- World’s
Most Reliable Operator of Airbus A330s (small fleet) - Airbus Industrie.
- World’s
Most Reliable Operator of Airbus A340s (small fleet) - Airbus Industrie.
- First
Runner-up for World’s Best Cabin Staff – Skytrax
- Best
Airline in South Asia (3 consecutive times) from Travel Trade Gazette k
- Best
Airline in Central Asia (4 consecutive times) - Skytrax
- Best
Overall In -flight Entertainment (small fleet), twice – World Airline
Entertainment Association
- Best
Airline Turnaround of the Year 2004 – Centre for Asia Pacific Aviation
- Galileo
Indian Express Award for Best Eastbound International Airline
- Runner
–up for Best Asian Airline in Survey by UK’s Daily Telegraph
- Imperial
Mark in recognition of exceptional of services, luxury and quality
- PATA
Gold Award 2007 for Best Airline Marketing Campaign
- Airline
of the Year 2008, 2009, 2010 and 2011 - Sri Lanka Presidential Travel
& Tourism Awards
- Merit
Award at the National Best Quality Software Awards 2010 (NBQSA),
- Second
place ‘Unlocking Business Intelligence’ category. CIMA Global Awards 2010
- Hall
of Fame – Airline of the Year for three consecutive years - Sri Lanka
Travel & Tourism – 2010
- Best
Print Media Presentation on Travel and Tourism in 2010 and 2011 at the Sri
Lanka Presidential Travel & Tourism Awards
- Etihad
Global Excellence Award 2011 for Best Regional Caterer.
- National
Energy Efficiency Gold Award in the large scale state sector at the National
Green Awards 2011
- Green
Jobs Award 2011 towards environmental conservation
- SriLankan
IAA among IATA’s Top Ten best Authorized Training Centers (ATCs) in S.
Asia
- Best
Airline Operator from South Asia award at the KLIA Awards (in 2005, 2006,
2007, 2008, 2009 and 2011)
- Silver
Award in the ‘State Sector Buildings – Large Scale’ category at the
Vidulka National Energy Efficiency Awards 2012
- Bronze
Award for SriLankan Catering Ltd. in the ‘State Sector Buildings – Large
Scale’ category at the Vidulka National Energy Efficiency Awards 2012
- ‘Best
in Region: Asia & Australasia’ award at the Airline Passenger
Experience Association (APEX) 2012 Passenger Choice Awards in USA
Countries
Servicing:
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 64 destinations
in 34countries in Europe, the Middle
East, South Asia, Southeast Asia, the Far East, North America, Australia and
Africa.
Employees
Approximately 5900.
·
Financial Data
The financial information included in the
report has been obtained from Subject Company’s Annual Report for 2012/2013.
The Chairman in his financial review of the
company states:
Quote - “A Year of Growth – Financial
Overview for 2012/2013”
“• Company revenue for the fiscal year
2012/13 was Rs. 119,570.90M compared to Rs.92,867.93M in 2011/12, an increase
of 28.75%
• Operating Expenditure was Rs. 143,972.27M
compared to the previous year’s Rs. 111,775.88M, an increase of 28.80%
• Passenger capacity increased to 15,944.31M
Available Seat Kilometers (ASK) from 14,248.94M in the previous year
• Revenue Passenger Kilometers (RPK) totaled
12,968.74 RPK, compared to 11,270.23M RPK during the previous year
• Passenger Load Factor during 2012/13 was
81.34%, up from the 79.10% of the previous year.
However the Company’s net loss increased to
Rs. 21,749.75M in 2012/13 compared to Rs. 19,774.74M in the previous year
mainly due to the following reasons:
• High fuel costs
• Less than satisfactory yields due to the
recession in Europe and competition from other airlines
• Significant investments in acquiring
additional capacity and enhancement of supporting services, including the
Cabin upgrade programmes, the total benefit
of which will be derived over the coming years”.
“The
Airline plans to maximize passenger revenue by:
• Capitalizing on its competitive advantage in
non-stop service to Sri Lanka
• Increasing premium yields in line with the
upgraded business class product
• Enhancing revenue management practices and
systems to maintain high load factors at acceptable yields
• Attracting a greater proportion of passenger
traffic through lower-cost internet booking channels”. Unquote
He
further states:
Quote
–“SriLankan also expects to benefit from:
• Increased demand for travel to Sri Lanka
• Increased premium traffic in the region
• Strong economic growth in the country and
its major destinations
• Network alignment with key growing
population and economic centres
• Significant government and international
investment in expanding Colombo’s airport and opening the nation’s
second international airport”.
Unquote
·
General
Comments
All operational and financial information of the subject company are provided in their Annual Report of 2012/ 2013.
·
Credit
Recommendations
No computerised data bases exist to make checks whether the partners or the company has any legal action or lawsuit initiated against any of them but informal (but not in-depth) checks do not indicate any such cases in the public knowledge
ANALYSIS & RATING
Appraisal and Rating of Subject Company
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Rating: |
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a) Business Scale |
Large |
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b) Business Trend |
Expanding |
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c) Management Capability |
Above Average |
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d) Commercial Morality |
Above Average |
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e) Reputation |
Above Average |
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f) Market Situation |
Competitive |
FOREIGN EXCHANGE RATES
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Currency |
Unit
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Indian Rupees |
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US Dollar |
1 |
Rs.60.33 |
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UK Pound |
1 |
Rs.103.18 |
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Euro |
1 |
Rs.81.58 |
INFORMATION DETAILS
|
Analysis Done by
: |
DIV |
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Report Prepared
by : |
MNL |
RATING EXPLANATIONS
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
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71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit transaction.
It has above average (strong) capability for payment of interest and
principal sums |
Large |
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56-70 |
A |
Financial & operational base are regarded healthy. General unfavourable
factors will not cause fatal effect. Satisfactory capability for payment of
interest and principal sums |
Fairly Large |
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41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
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26-40 |
B |
Capability to
overcome financial difficulties seems comparatively below average. |
Small |
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11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with full
security |
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<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
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NB |
New Business |
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This score serves as a reference to assess SC’s credit risk and
to set the amount of credit to be extended. It is calculated from a composite
of weighted scores obtained from each of the major sections of this report. The
assessed factors and their relative weights (as indicated through %) are as
follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)
This report is issued at your request without any
risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL)
or its officials.