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SriLankan to divide business into 4 branches

05 Dec 2021

  • Division to increase efficiency and attract investors
  By Yakuta Dawood  Loss-making state-owned enterprise SriLankan Airlines is planning to divide the SriLankan Group into four separate businesses as part of its restructuring strategy, The Sunday Morning Business exclusively learns. A reliable source at Airport and Aviation Services (Sri Lanka) (Pvt.) Ltd. (AASL) told us that SriLankan’s four departments, upon separation, would be cargo, engineering, ground handling, and catering. The AASL believes separation would increase the efficiency of the now loss-making SriLankan Airlines while also making it more convenient to attract investors. “After breaking into four operations, SriLankan can attract investors for the company, earn a higher profit, and then allocate those funds to the loss-making flight operations division,” the source said. Furthermore, the source also mentioned that the discussion of privatisation was hyped up, as the Government had affirmed that it would not be providing any financial subsidies to SriLankan Airlines for 2022. As of last Friday (3), we are yet to receive a response from senior officials from SriLankan Airlines. Furthermore, attempts to reach Treasury Secretary S.R. Attygalle and other officials from the Ministry of Finance for further clarification proved futile. Meanwhile, speaking to The Sunday Morning Business, the AASL stated that SriLankan Airlines was a predominant player, as it had 55% of flight movement in and out of the country whilst also bringing about 55% of the total passengers coming into the country. “It’s a product that pushes and advertises Sri Lanka all around the world. There are a lot of benefits coming in through SriLankan, although it is not profitable. So, while they have their own plan of restructuring, it is very important to give thought to the airline’s existence, as it is our national carrier at the end of the day,” the official said. According to him, officials were presently discussing a feasible and profitable plan. Nevertheless, the final decision is yet to be taken by the Government and the other officials involved. According to the Committee on Public Enterprises (COPE), the total loss incurred by SriLankan Airlines from the day it was taken over by the Government of Sri Lanka up to 31 March 2021 amounts to Rs. 240 billion (approximately $ 1.84 billion). In September 2021, COPE Chairman Prof. Charitha Herath, speaking to us, stated that the COPE had suggested that the Government reassess the company, rather than investing money in a “complete disaster that might continue for years without making any profit”. “They (SriLankan Airlines) have been submitting different kinds of business plans to the COPE, but we were of the view that those business plans do not lead to any accurate results,” he added. Therefore, he said that the COPE had instructed SriLankan Airlines and the State Ministry of Aviation and Export Development to submit three reports to it. According to him, the COPE had instructed the Secretary to the State Ministry to provide a feasibility report of operating SriLankan Airlines as a government venture. Based on the reports, Prof. Herath said the COPE had come up with four alternatives for SriLankan Airlines:
  • Carry on the operations as usual with a very productive, proactive, viable and profitable business plan
  • Lose and restart using a new mechanism through which SriLankan can drop some burdens
  • Go for a separate airline by completely closing down the present one, and starting three different companies – one each for the airline, catering, and for ground handling
  • Completely close down the airline as a government entity
Adding, he stated that once the reports were submitted and thoroughly examined, the COPE would make recommendations to Parliament and the Ministry of Tourism, which oversees aviation, in order to make a decision based on the four alternatives.


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