Journalist – ‘Is the government planning to sell SriLankan National Airlines by the end of 2024? Can you explain the current situation and the process? (Sri Lanka Latest News)
Minister of Ports, Shipping and Aviation Mr. Nimal Siripala de Silva
‘There will never be a complete sale of SriLankan Airlines. If we do that, we will lose the right to land in many important destinations in the world. Under this project, it is expected that the government will keep 51% shares of SriLankan Airlines and sell the remaining 49% shares to another party. This method has been done before. Accordingly, this time too we hope to sell such a number of shares very soon. In order to save the airline, this work should be done immediately…’
Journalist
How is the current progress or success of this joint venture?
Minister
According to Sri Lankan law, we cannot sell a national business completely to someone else. Thus, the World Bank has appointed a consultant for the sale of a number of shares of the National Airlines. About 8 months ago, I submitted a cabinet paper to the government about this process. We currently owe $1.2 billion to SriLankan Airlines.
In this way, there are debts to many institutions. This is why we urgently need a capital injection for now. Otherwise, it will be very difficult to continue this airline. A large capital of at least 500 million dollars should be used here. But the government is not able to spend that much money.
Journalist
Are there any parties currently interested in this project?
Minister
We have not yet made an official statement about the buyers. But so far some parties have made inquiries from our government. The decision will be taken immediately after receiving the World Bank consultant’s report.
Journalist
What happens if there is no buyer?
Minister
If so, the flights may be suspended. But we believe that this crisis will find a solution.
The story of the 44-year-old National Airlines is a long one. SriLankan Airlines was privatized in 1998 to make it a more profitable company. That is, in 1998, 40% of the shares of this company were given to Emirates Airline located in Dubai. The government received 70 million US dollars for that, and this agreement was signed for a period of 10 years.
Later, the percentage of shares given to the Emirates Company was increased to 43.6%, and under that company, SriLankan Airlines became a high revenue and profitable company. In this way, during the Rajapaksa regime in 2008, SriLankan as a Company had become a very successful company. The profit of this company, which was mentioned as ‘Sri Lanka – Emirates’, was 9.3 billion rupees per year at that time. This was a huge gain.
Since 2008, SriLankan Airlines started crying. By that time, the chief executive officer of this airline was Peter Hill, a British national who was a very talented veteran airline administrator. He was in charge of the administration of Emirates Airlines before joining the administration of SriLankan Airlines in 1999.
Peter Hill was entrusted with the administration of the Sri Lankan Company along with the acquisition of the shares of the Sri Lankan Company by the Emirates Company. Accordingly, during his administration, this airline started to make billions of rupees in profit. But as time passed by in 2008, a wonderful event happened. That is, a certain special incident happened when Arabaya got into a crisis with the then president Peter Hill. For that reason, Peter Hill’s license and visa to work in Sri Lanka were revoked.
The crisis did not stop there either. After that, the agreement with Emirates Airlines was canceled in 2008, and it was not extended again. From then on SriLankan Airlines began to suffer and suffered heavy losses day by day. According to official reports, SriLankan Airlines’ loss in seven years under the Rajapaksa administration from 2008 to 2015 alone was 128.2 billion rupees.
This was 875 million US dollars. Indeed, this was a very heavy loss, and the airline was unable to recover until now. The multi-million dollar profits during the joint venture with the Emirates Airline Company have deteriorated to the point where they have lost millions of dollars due to a personal rift with the former head of state.
It was revealed that the reason for the airline’s heavy loss was a lot of corruption and waste in the company. Due to the appointment of relatives and friends of the rulers of the time to SriLankan Airlines, large-scale frauds were committed by the people who held those high positions. A book is not enough to write those stories.
After the Yahapalana government came to power in 2015, a five-member committee was appointed by the then President Maithripala Sirisena to investigate the destructions that happened. This commission started an investigation into the irregularities of the company concerned under 10 basic facts. The cancellation of the agreement between SriLankan Airlines and Emirates Airlines, purchase, sale and lease of aircraft and other assets, employee recruitment, establishment and termination of Mihin Lanka Company were also taken into consideration.
The Commission was appointed on January 31, 2018, and the commission’s report was handed over to President Maithripala Sirisena on July 2, 2019. Although this report was forwarded to the Attorney General, cases were filed against the accused and arrests were made, but no one has gone to jail so far. Also, after the Rajapaksa government came to power, many accused that faced various cases were acquitted by the court. Thus far, no person caught in any serious corruption scam has been sentenced to long prison terms. Every day only the little man in the society was sentenced to prison.
After the exit of SriLankan Airlines from Emirates, the loss in 2009 was Rs. 930 crores, and in 2014 it was close to Rs. 400 crores. It is said that the loss was reduced to about 160 crore rupees during the previous good governance government i.e. in 2015 and 2016. In addition, in 2008, when Emirates Airlines had shares, the net assets were Rs 1,500 crore, and after the exit of Emirates, the net assets were negative Rs 7,500 crore in 2015, according to reports.
Accordingly, it was reported that the liabilities had increased more than the assets. Thus it was stated that SriLankan Airlines had not made a profit in any sector. It is a fact that economic analysts have stated that this company can build another big highway in Sri Lanka with the loan money obtained from various banks and other institutions on treasury guarantee. Thus ‘Sri Lankan Airlines’ became a great burden to the country.
SriLankan Airlines, the national airline of our country, has fallen into a very deep abyss and suffered losses for the past 15 years. The destruction started in 2008. The decline occurred after the elimination of Emirates Airlines, which was working together with this airline at that time. According to its authorities, there has been a good atmosphere in SriLankan Airlines since the last two years. In other words, no money has been received from the government for the activities of the airline during those 02 years, and the government has also stopped giving money.
Therefore, the airline has been able to cover its expenses with the revenues it earns. In any case, despite this situation, the loss of crores of rupees has not stopped so far. In such an environment, a few days ago, SriLankan Airlines was recently awarded as the leading international airline in Asia at the South Asian Travel Awards (SATA) held in India.