SriLankan Airlines said net profit for 2007/08 reached $45.38 million on the back of sale and leaseback of three Airbus A340 aircraft but rise in price of fuel resulted in operational loss of $5.45 million.

The airline said financial performance for the year was severely affected by the steep rise in the price of aviation fuel despite revenue from passenger sales showing a significant increase at $590.95 million, up from $492.57 million, an increase of 19.97 per cent.

It spent an additional $63.31 million on fuel in 2007/08, with the fuel bill increasing by 29.26 per cent to $279.66 million from $216.35 million in the previous year as result of the average price of jet fuel reaching $101.81 per barrel in 2007/08 compared with $87.09 in 2006/07.

The airline had recorded a net profit of $7.88 million in the previous year. The airline's other business is its fully-owned subsidiary SriLankan Catering.

Dr PB Jayasundera, the Group's chairman, said: "The global aviation industry as a whole is in the throes of its largest ever crisis, brought about by the steep increase and uncertain direction of fuel prices, driven by a combination of price speculation in global markets, and increasing demand from the expanding economies of Asia.

"In the short term, SriLankan Airlines faces a challenging future, as does the entire global air transport industry, buffeted by volatile fuel prices and economic slowdown."

"The quantum of funds raised through the sale of the aircraft will be utilised towards re-fleeting of the A320 narrowbody fleet, and planned refurbishment of cabins on the widebody fleet," said Dr Jayasundera.

Nishanta Wickremasinghe, executive director, said: "The year under review was an important one in the history of the airline, as it brought about a change in the management control of the company upon the expiry of the shareholders agreement with the investor, Emirates.

"The Government of Sri Lanka reconstituted its nominees on the Board, and a new CEO and Senior Management Team were appointed to chart the future of this airline."

The Government owns a 51.05 per cent shareholding in the airline, with Emirates owning 43.63 per cent and employees 5.32 per cent. - TradeArabia News Service