SriLankan Airlines’ directors told “perform or quit”
View(s):The board of directors at loss-making SriLankan Airlines has been told to ‘perform or quit’ if the airline doesn’t return to profitability soon. Not mincing his words, Public Enterprises Development Deputy Minister Eran Wickramaratne warned this week that the national carrier should get its act together and stop the bleeding (losses) within two years and then show a growth path.
“I will not accept a budget which shows five years of continuous losses. Those who are managing the company and who are on the boards of the company need to take responsibility (or leave),” he told a pre-budget panel discussion organised by the Sunday Times Business Club (STBC) on Monday at the Cinnamon Lakeside Hotel. The airline comes under the purview of Mr. Wickramaratne’s ministry.
“Someone (from the airline) asked me which aircraft should be purchased and which routes should be stopped. I told him that this is his decision, not mine and if ‘you are unable to do, then get some who can,” he said, adding that for too long politicians have been interfering in commercial decisions.
His remarks were prompted by a dismal but ‘real’ picture of the economy presented earlier at the same event by W.A. Wijewardene, former Deputy Governor of the Central Bank (CB) who raised many worrying issues. Referring to a ‘crisis’, the former central banker said within nearly nine months foreign exchange reserves have fallen to US$6.4 billion from $8 billion.
Of this, $4.5 billion is hot money which could flow out at any time while ‘readymade’ cash reserves is only $5.5 billion.
Under the Special Data Dissemination Standards of the IMF which the CB has been certified with, information cannot be hidden unlike before.
“So the CB has to disclose information and according to that in the next 12 months, loan repayments (capital + interest) will be $4.4 billion. We have only $5.5 billion as free cash; thus if we pay out $4.4 billion, we won’t have any money,” he said, adding that “this is a pathetic situation”.
On the national carrier, Mr Wijewardena said the airline was given Rs. 30 billion by the Treasury (before the current Government) without parliament sanction. “Without the knowledge of parliament, the taxpayers’ money is being used to bail out those public corporations which are being run from losses,” he said. He said the airline prepared a budget for the next five years in which every year is a loss. “Imagine a private company preparing a budget with losses for the next five years?” he asked.
He said all the macro targets set in the 2015 budget have been missed even though the Government started the year with lots of hopes, expectation, pledges and promises.
Mr. Wijewardena said that when in 2012 independent economists and analysts including the Institute of Policy Studies drew attention to the oncoming crisis they were labelled as unpatriotic and accused of being funded by foreign NGOs. He was of the view that interest rates should rise as low interest and more money in the hands of people had led to more imports. “The Government said it would not resort to sovereign borrowings but went to the market twice raising more than $2 billion,” he said, thereby accumulating more foreign debt.
He said that with a major macro-economic crisis “don’t expect any relief measures in the budget”.JVP Parliamentarian Sunil Handunneththi said that new thinking was needed to drive exports, which hasn’t taken off. “We are the main tea centre in world but we are not adding value to our product. The same applies to rubber and coconut,” he said.
On employment migration, he said there is a need to send out skilled labour like doctors, engineers, technicians or accountants.
“Our education system should be market oriented. We only focus on graduates (and their needs). What about OL and AL students who cannot enter the university? What can they do… do they have options? We should train them,” he said.Corruption was a big issue while budget management has become a joke, he added.
In further remarks, Deputy Minister Wickramaratne said the biggest problem faced by country to get to the next level is a cultural problem relating to the mindset of the people. “When we meet the public, there is a strong sense of entitlement … that this is what we want, this is ours … this is what we should get. This sense of entitlement leads to poor attitudes. The Government is only the facilitator and unless these problems (of entitlement) are solved the country will always be behind,” he said, adding that “I lay no blame but only identify issues and suggest solutions”.