SriLankan introduces fuel surcharge

SriLankan Airlines introduced a fuel surcharge on all airline fares from July 1. The decision to increase fares is due to the unprecedented rise in world fuel prices.

Crude oil prices which averaged around US$ 75 per barrel in 2007 have shot up to US$ 141 for the first half of 2008, recording an 84 per cent increase. In January this year, a barrel of crude oil was US$ 95, and has increased to US$ 128 as at June 2008 which is an increase of 35 per cent.

The speed at which world oil prices are rising is the biggest challenge for airlines. There is no time to manage the transition.

While any business has to make sure its product reflects the cost of production, SriLankan is not passing on the total increase in the cost to its passengers. It has, like most international airlines introduced a fuel surcharge with effect July 1, 2008, but it will recover only 50 per cent of the additional costs incurred.

The most practical way to respond to the sharp increase in cost (fuel consists of 52 per cent of the airline's cost as compared to 27 per cent of the total cost last year) is by way of a fuel surcharge based on the distance.

Fitch affirms Sampath's 'AA-(lka)' rating

Fitch Ratings Lanka has affirmed Sampath Bank PLC's (SB) National Long-term rating of 'AA-(lka)' (AA minus (lka).

The outlook is stable. At the same time, the agency affirmed the ratings on SB's outstanding subordinated debentures of LKR3.3bn at 'A+(lka)', and the bank's Individual and Support ratings at 'D/E' and '5', respectively.

The ratings reflect SB's strong brand franchise among local Licensed Commercial Banks (LCBs), and its healthy capital position.

SB's loan book grew at a relatively high rate of 24% during the 12 months ending 31 December 2007 (FY07) compared to a growth rate of 18.6% for the LCB sector.

SB's corporate loan portfolio accounted for 33% of total loans at FYE07, while consumer loans and loans to small and medium sized businesses amounted to around 41% and 26%, respectively.