National carrier SriLankan Airlines sees a recovery to pre-pandemic revenue levels by the end of next year as Covid-19 vaccines roll out globally and its home country loosens air travel restrictions, its chairman said.
The state-owned airline's revenue should recover to 75-80 per cent of pre-crisis levels by 2021-end as the Indian Ocean nation plans to reopen its international airports for travellers next month, Ashok Pathirage told The National. The carrier aims to return to profitability by 2022.
"We think the worst is in the past now and we can look forward to gradual improvement in aviation, travel and tourism," Mr Pathirage said in a phone interview. "The vaccine is great news for all of us ... hopefully it will release restrictions and people will have confidence to travel again."
The optimistic outlook comes as global carriers are facing the worst crisis in the history of aviation as the Covid-19 pandemic decimated air travel demand. Airline bankruptcies are on the rise with the industry set to lose an estimated $157 billion across 2020 and 2021, according to the International Air Transport Association (Iata).
To help its flag carrier weather the crisis, Sri Lanka's government pledged $500 million in financial aid, of which $150m was disbursed this month, Mr Pathirage said. The rest of the funds will be disbursed over two years.
"With Covid, we have taken a fairly large hit, so this is to support our cash situation," he said, without providing details. "The government realises the airline is important to develop the country as a tourist destination."
Governments around the world have disbursed some $173bn in aid to their cash-strapped airlines, according to Iata.
SriLankan Airlines, which recorded about $70m a month in revenue pre-crisis, is currently making about 30-35 per cent of that, the chairman said. He expects a recovery to 40 per cent of pre-Covid revenue levels in December on higher demand for repatriation flights and air cargo.
Sri Lanka's government is expected to re-open its international airports for visitors in January after a shut-down since March when the first local coronavirus case was detected.
"That is very positive news," Mr Pathirage said. "But from an airline perspective, we don’t expect business to jump-start. It's a gradual process and we need to start marketing. With the vaccine, tourists will be more confident. We need to wait and see."
Tourism is vital for the island nation, which attracted around 2 million visitors last year and the industry contributes about 11 per cent of its gross domestic product.
Sri Lanka has imposed strict rules to curb the spread of the virus. By Thursday, it had recorded more than 30,000 Covid-19 cases and 144 deaths, while 21,800 people have recovered, according to Worldometer, which tracks the spread of the virus globally.
"We will look at how to reshape SriLankan into a very strong regional carrier competing with the best."
"If you want to bring passengers, no one will quarantine for 28 days, we have lobbied the government and health regulators to come up with something practical without compromising on health and safety standards," Mr Pathirage said.
Iata has called on governments to adopt pre-flight Covid testing instead of demand-stifling quarantine measures.
Sri Lanka's government is yet to announce the required health measures to reopen its borders to international travellers but Mr Pathirage said an ideal scenario would entail PCR testing before and on arrival, a seven-day quarantine period and another test before release.
SriLankan Airlines is currently operating a limited number of passenger flights using 70 per cent of its all-Airbus fleet of A330s, A320s and A321s, while the remaining 30 per cent of aircraft are still grounded.
To preserve cash and control costs, the airline re-negotiated its aircraft leasing contracts, leading to savings of about $150m over the next five years, the chairman said.
The carrier offered 500 employees a voluntary retirement scheme a week ago, after ending the use of outsourced and contract workers, he said. This will reduce the workforce to 5,000 from 7,000.
"After Covid, SriLankan Airlines will be in much better shape to return to profitability," he said. "Our plan is to make money by 2022."
The operator is planning new routes next year to Sydney, Seoul, Kathmandu and European cities, the chairman said. It is seeking to resume flights into India, one of its key markets, and increase frequencies to Dhaka.
In terms of cargo, the airline is seeking to triple or quadruple its freight volumes over the next two years to reduce reliance on passenger operations, Mr Pathirage said.
To drive its cargo expansion, the airline is preparing a request for proposals (RFP) to procure its first two freighters, he said.
"There's so much cargo business at the moment. Exports have picked up, so there’s huge demand and we want to help the national economy," he said. "One lesson learnt from Covid is not be completely dependent on passenger business and to look for other alternatives."
In the longer term, the carrier plans to become a regional hub in Asia with a larger fleet and an expanded airport at its Colombo base, Mr Pathirage said.
Opportunities lie in boosting traffic from India and ferrying them, via Colombo, to Far East destinations such as Singapore, Australia and China, he said, but acknowledged competition from long-haul Gulf giants such as Emirates. Tapping into Sri Lanka's substantial tourism potential is another growth opportunity.
"We will look at how to reshape SriLankan into a very strong regional carrier competing with the best," Mr Pathirage said.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
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Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
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Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
The biog
Birthday: February 22, 1956
Born: Madahha near Chittagong, Bangladesh
Arrived in UAE: 1978
Exercise: At least one hour a day on the Corniche, from 5.30-6am and 7pm to 8pm.
Favourite place in Abu Dhabi? “Everywhere. Wherever you go, you can relax.”
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Try out the test yourself
Q1 Suppose you had $100 in a savings account and the interest rate was 2 per cent per year. After five years, how much do you think you would have in the account if you left the money to grow?
a) More than $102
b) Exactly $102
c) Less than $102
d) Do not know
e) Refuse to answer
Q2 Imagine that the interest rate on your savings account was 1 per cent per year and inflation was 2 per cent per year. After one year, how much would you be able to buy with the money in this account?
a) More than today
b) Exactly the same as today
c) Less than today
d) Do not know
e) Refuse to answer
Q4 Do you think that the following statement is true or false? “Buying a single company stock usually provides a safer return than a stock mutual fund.”
a) True
b) False
d) Do not know
e) Refuse to answer
The “Big Three” financial literacy questions were created by Professors Annamaria Lusardi of the George Washington School of Business and Olivia Mitchell, of the Wharton School of the University of Pennsylvania.
Answers: Q1 More than $102 (compound interest). Q2 Less than today (inflation). Q3 False (diversification).
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Who was Alfred Nobel?
The Nobel Prize was created by wealthy Swedish chemist and entrepreneur Alfred Nobel.
- In his will he dictated that the bulk of his estate should be used to fund "prizes to those who, during the preceding year, have conferred the greatest benefit to humankind".
- Nobel is best known as the inventor of dynamite, but also wrote poetry and drama and could speak Russian, French, English and German by the age of 17. The five original prize categories reflect the interests closest to his heart.
- Nobel died in 1896 but it took until 1901, following a legal battle over his will, before the first prizes were awarded.
Islamophobia definition
A widely accepted definition was made by the All Party Parliamentary Group on British Muslims in 2019: “Islamophobia is rooted in racism and is a type of racism that targets expressions of Muslimness or perceived Muslimness.” It further defines it as “inciting hatred or violence against Muslims”.
Countries recognising Palestine
France, UK, Canada, Australia, Portugal, Belgium, Malta, Luxembourg, San Marino and Andorra
