Emirates opts out of SriLankan Airlines

SriLankan Airlines Chairman Harry Jayewardena, the most influential businessman in Sri Lanka, checking out a stall promoting dates at the opening of a 3-day Pakistan trade exhibition on Friday. Jayewardena has an uphill task to take the airline forward after Emirates said it was pulling out from management after its contract ends in March. Pic by J. Weerasekera

After SriLankan Airlines Chief Executive Peter Hill’s work and residence visas were revoked last month by the Sri Lankan government, Emirates Airlines said this week it was not interested in a fresh management contract from March 2008, a statement that triggered public reaction from many quarters.

"Emirates has notified the Government of Sri Lanka that it will not be renewing the Shareholder's Agreement which expires on 31st March 2008 and accordingly, with effect from 1st April 2008, management control of SriLankan Airlines will pass to the Government of Sri Lanka," said President of Emirates Airlines and Managing Director of SriLankan Airlines, Tim Clark in a statement. "Emirates will continue to manage the company until 31st March 2008. Emirates will also retain its 43.6% equity in the company for the time being and continue to have a Board presence."

While the government has a 51 per cent stake in SriLankan Airlines, Emirates still owns 43.6 per cent of shares and has yet to decide on what to do with them. Addressing the media on Wednesday, Treasury Secretary Dr. P.B. Jayasundera said SriLankan Airlines has no plans to merge with Mihin Air but may opt for a joint venture. "Still SriLankan Airlines is managed mainly by Sri Lankans and with the change of the Emirates agreement there would not be any change immediately," Jayasundera said adding that the government has the capacity to manage the entity.

SriLankan Airlines Chairman Harry Jayewardena also released a statement on the Emirates decision. "In pursuant to a letter received by the Government of Sri Lanka from Emirates, stating that they will not continue with the Management Agreement of SriLankan Airlines from 1st April 2008, the Government of Sri Lanka has decided that it will take the total control of the National Carrier's Management from this date and will continue to manage the national carrier for the best interest of the public and the country at large." Jayewardena added that the government will remain the major shareholder of the airline and will not divest or sell its shares to any other partner or carrier.

The Sri Lankan Tourism Promotion Bureau also released a statement on SriLankan Airline’s and tourism operations, saying it believes that 'there is a high degree of competence at the various levels of management of SriLankan Airlines that Emirates has helped develop under its management.'

Further, the management team of the airline is expected to continue its work when the change over of management will take place upon the expiry of the agreement from April 1, 2008.

In the same statement, Sri Lanka Tourism said 'there is no cause for alarm for stakeholders of Sri Lanka Tourism as it is expected that normal operations will continue and we expect the transfer of management from the Emirates to the major shareholder tobe smooth with minimum impact on tourism operations.'

The statement continued that Sri Lanka Tourism expects the focus on the destination to be even more now and request all their partners to be confident and work in tandem with the airline to assist in a smooth management transition process.
(NG)