Cabinet approves amalgamation of SriLankan Airlines

Cabinet approves amalgamation of SriLankan Airlines

Cabinet approves amalgamation of SriLankan Airlines

Written by Staff Writer

26 Apr, 2016 | 10:45 pm

Cabinet had granted approval for SriLankan Airlines to amalgamate with a private entity. Prime Minister Ranil Wickremesinghe elaborated on subject.

Following independence from Colonial Rule, Sir John Kotelawala commenced Air Ceylon in 1948 as the flag carrier airline of Sri Lanka , in a bid to showcase independence and pride of the country. After an open economy policy was introduced to the country in 1977, Air Ceylon was rebranded as Air Lanka, and modernised.

Air Lanka which was termed as Asia’s Best Airlines in the 80s was leader in the skies, introducing the Airbus A340- and A320 aircraft to its fleet.

In 1998 Air Lanka, which was state-owned, was partially privatised with investment by the Dubai-based Emirates Group which obtained 51 percent of the shares and also overlooked the management. In 1998, the Air Lanka re-branded to SriLankan Airlines.

In 2008, during the Mahinda Rajapaksa administration, the Government re-purchased Sri Lankan Airlines after paying for the 51 percent of shares owned by the Emirates Group. Later a plan was formulated to convert the Airlines in to a profit making entity by 2017 with purchases of 07 Airbus A330 and 08 Airbus A350 models.

Based on this decision, measures were taken to gradually remove 06 Airbus A340 aircraft from service. At present the Sri Lankan Airlines fleet comprises of 22 aircraft. With a staff of 6800, Sri Lankan Airlines operates to 94 destinations in 44 countries.

Speaking at a media briefing in Colombo today, Prime Minister Ranil Wickremesinghe said the losses incurred by SriLankan Airlines cannot be controlled through the economy.

Prime Minister, Ranil Wickremesinghe stated that SriLankan Airlines has a total of 3.252 billion dollars in debt which is 460 Billion in rupees as Sri Lanka cannot re-pay this debt. Therefore, the government will take over some of its debt and will seek a partner who can manage the Airline so that it would not incur any more debt in the future. Action must be taken for purchasing an aircraft as 04 ordered aircrafts have not been produced

In addition, we have agreed to have a debate in Parliament on the second week in May

Minister for Special Assignments, Dr. Sarath Amunugama stated that if operations cannot be conducted of an airline when the fuel prices are low. And when this is a burden to the treasury they need to fear the future.

Explaining further, he added that it was discussed that the Airline will not be shut down. However, cabinet had decided to partner with a powerful airlines or entreprenuers to bring this airline to its previous state. This decision was taken to prevent the entire economy from falling apart. No one will lose their jobs.

Minister Dr. Sarath Amunugama commented on SriLankan Airlines becoming a loss incurring entity after moving away with the partnership with the Emirates Group.

Questions were raised by journalists whether a powerful airline or investor come forward. Premier Wickeremesinghe noted that they hope to bring in an airline or investors as the ministry has been instructed to look for a company that can provide advise on this matter from Sri Lanka.

Another question was raised that the opposition alleges that it is a move to sell SriLankan Airlines, answering the question Premier Wickremesinghe noted that it will not be sold, but in fact they will enter a new partnership as they have to repay 3.2 billion dollars in debt.

In addition, he noted that no decision has been made to rebrand Sri Lankan Airlines.

Latest News