New bid to save stricken airline

The board of SriLankan Airlines has submitted a restructuring plan to the Government in a last ditch effort to save the stricken national carrier. 

The plan puts the emphasis on downsizing and splitting off certain activities, such as ground maintenance, into separate companies. It comes after a lengthy search for an international investor appears to have drawn a blank.

The Government initially called for bids in July last year and expected to have finalised an agreement by December, but earlier this year it said that three offers had all been too low.

Further talks were scheduled, but by May the last interested party, American private equity firm TPG, pulled out.

In June Minister of Finance, Eran Wickramaratne said there was some interest from Dubai-based carrier Emirates over a possible tie-up with SriLankan as well as discussions with other entities including “one from Japan”. 

However Emirates, which acquired a stake in SriLankan in 1998 for $A90 million only to sell it back to the Government 12 years later for $A68 million, said it had no plans to get involved again.

Most commentators believed that Wickramaratne’s statement was more wishful thinking than based in reality.

Now Chair of SriLankan Airlines, Ajith Dias says he wants the Government to consider the carrier’s own plan to bring it back to profitability which involves consolidating some operations and shedding unprofitable routes. He believes the airline can be turned around.

“We need to become an airline operating primarily between India, the Middle East and Australia…Europe is a dead loss, only London is worth it,” Dias said.

“We have made a great deal of progress in eliminating corruption and mismanagement and a lot of the criticism we are getting now is unjustified.”

The airline’s relations with the Government have been anything but smooth. In 2007, British Chief Executive Peter Hill refused to bump passengers off a flight to make way for the entourage of then Sri Lankan President Mahinda Rajapaksa.

The President promptly revoked Hill’s work permit and appointed his brother-in-law, Nishantha Wickremasinghe as company Chair.

During Wickremasinghe’s watch the carrier’s losses mounted, leading to Dias’ appointment after the Government changed in 2015.