Restructuring plan to bring SriLankan back to profitability

Restructuring plan to bring SriLankan back to profitability

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The SriLankan Airlines will submit a restructuring plan to the government this week, which could be implemented by the government, if there is no foreign partner to come under the proposed public-private partnership (PPP) by July 31, Sunday Observer reliably learns.

The plan is likely to emphasize on the areas such as downsizing the group, operating ground handling and engineering as separate companies with separate managements and providing fuel at international prices, with political will to implement the changes being critical.

When asked SriLankan Airlines Chairman Ajith Dias said, the government cannot continue to subsidize this airline. “A restructuring program of our own is needed, if there is no foreign interest in this airline. We want to propose steps on how to bring the company back to profitability in two years, by consolidating the airline’s operations, shedding loss making routes and focusing on profitable ones,” he said.

“If we take the political interference out, and commit to implement this (restructuring plan) over the next two years, it will be possible to make it a profitable airline again,” Dias said in an interview with the Sunday Observer.

After the report the government will have to decide on its implementation or the way forward by July 31, the cut-off date, with perhaps the ‘in-house’ restructuring plan the only solution available, since there have been no foreign takers for the airline under the proposed public-private partnership.

“I really hope that a foreign airline comes – then no politician will try to mess with them,” Dias said, adding however that: “We will be happy if a Sri Lanka consortium comes.”

Texas Pacific Group was the only qualified bidder when expressions of interest were called but withdrew after negotiations.

“We did everything possible to get them down. They are as large as Sri Lanka’s economy,” Dias said. “They have investments in Sri Lanka.

They found extraordinary talent within SriLankan Airlines which they mentioned in their departing letter.”

“The airline must get into a breakeven situation – we need to take dramatic steps to do that,” Dias said. As a group SriLankan Airlines is profitable with most profits coming from catering, ground handling and engineering.“We will become an airline operating primarily between the Middle East and Australia – we need to consolidate within this region. Europe is a dead loss – only London is worth it.” Dias believes the country does need a national airline. “During the time of the Katunayake airport bombing it was only SriLankan Airlines that managed to support our exports and bring in tourists – the two industries which brought foreign exchange to this country,” he said. “It helped us send our orders for apparel on time. The apparel business grew well and the national airline helped,” Dias who was a pioneer in the apparel industry and a Co-founder of the Brandix Group said.

Dias believes the management team has made progress in turning around the national carrier by reducing losses and, most importantly, eliminating corruption, and feels criticism is unjustified and a result of misunderstanding of the highly competitive nature of the airline business and the Weliamuna report.

“The Weliamuna report was based on what people said. It was not an investigation and was done quickly, within a month. I want to ask which part have we not implemented?

“The main thing was corruption – corruption has been eliminated. No one says we are corrupt now,” Dias said.

“The Weliamuna report is a catch phrase to sling mud at me. Some politicians do this because we didn’t give in to political pressure.” Dias said he had been misquoted on the Weliamuna report several times and believes it was very useful. “The major part of it was about decisions made in the past, which was very clearly for the Financial Crimes Investigation Division and Bribery Commission to investigate, which they are doing. All documentation needed has been given, and our guys are in and out of there. A major part of the Weliamuna report was about misusing power – for which certain actions have been taken.”

sundayobserver.lk

 

1 COMMENT

  1. It’s sad to say that I can’t see any good idea from Mr Ajith Dias. He stated “..Europe is a dead loss – only London is worth it.”
    In my opinion he has a very old point of view of this business and before thinking to give a share to an american company they should open their eyes and see what they have in their hands.
    He still thinks to the Point2Point flights instead of CMB as a Hub. Just like giving a Ferrari to my grandma who has not even a driving licence.
    When all the international airlines are increasing the frequencies from/to Europe’s capitals, he cancelled all connections (ROM, PAR, FRA).
    Just to do an example of Italy and Australia, every year 750.000 Australians go to Italy for sightseeing propose and about 60.000 Italians visit Australia every year. In Australia leave nearly 1 Million of people of Italian descent. Point Sri Lanka to the map and see its position. CMB is exactly in the middle on the link between Australia and Europe and also a convenient transit between destinations like China, Japan, Malaysia, etc. for different kind of passengers.
    Even if I think to the Point to Point service, I can’t change my mind. I do believe that a National carrier and the National Tourism Authority should create a range of joint promotions and marketing strategies to implement the incoming tourism. Unfortunately there is not a SriLanka Tourism Authority in all of Europe and if there is they are sleeping.
    UL should never be sold to anyone. My suggest to Mr Ajith Dias is to think to Europe in a different way, think to a new restructuring plan and reinstate your previous regular flights to Europe.

    AL
    twitter @a_lupoli

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