News

Crucial COPE-SriLankan meeting postponed

  • Postponement due to ‘various reasons’
  • Govt. wants debt-ridden carrier to at least ‘break even’
  • Carrier’s importance in national emergencies main argument against privatisation

By Pamodi Waravita

A crucial meeting between the Committee on Public Enterprises (COPE) and national carrier SriLankan Airlines, which was scheduled to be held tomorrow (9), has been suddenly postponed, The Morning learnt.

Well-placed government sources told The Morning yesterday (7) that the meeting was postponed due to unknown reasons.

When contacted by The Morning, COPE Chairman Prof. Charitha Herath confirmed that the meeting was postponed due to “various reasons”, without specifying them.

Dr. Herath in July directed SriLankan AirLines Chairman Ashok Pathirage to prepare a complete business plan to make SriLankan Airlines Ltd. profitable and submit it to the COPE within a month. The Committee also recommended to the Ministry of Tourism Secretary to study the current situation and submit a report at the ministerial-level within a month.

Dr. Herath confirmed that the Committee has received the report from the Ministry of Tourism, and the report as well as a position paper from SriLankan Airlines.

When asked if there are plans to privatise the national carrier as was reported over the weekend, Dr. Herath said that he does not know of any such plans.

Meanwhile, The Morning learnt that the Government is keen on seeing SriLankan Airlines at least break even, if it cannot devise a strategy to make profits.

“There are no discussions about the sale of the national carrier to the private sector yet. However, a business plan has been requested from SriLankan Airlines for proposals on how to make it profitable, or at least to make it break even. An internal report from the Ministry of Tourism has already also looked into the matter,” well-placed government sources told The Morning.

They further said that reasons for not privatising SriLankan Airlines have been cited as its importance during national emergencies; for example, during the Covid-19 outbreak in March 2020 in Wuhan, China, when the Government had to utilise SriLankan Airlines to transport Sri Lankan students unable to return to the country due to border closures and interrupted commercial air travel.

When The Morning contacted Samagi Jana Balawegaya (SJB) MP and COPE Member Eran Wickramaratne, who headed a 10-member committee tasked with making recommendations for a restructuring strategy for SriLankan Airlines in 2019, he said that SriLankan Airlines was supposed to present a position paper on the current and future strategies at the meeting scheduled for tomorrow.

“I have not yet been informed if the meeting was postponed,” he noted.

When asked about whether COPE is in favour of the privatisation of the airline, he said that he could only speak in a personal capacity.

“My position has always been that if the government cannot make it profitable, then we should have an investor. However, privatisation is not as simple as it looks. Reality is that there are lots of liabilities, and we must take a hard look at those and how they can be handled,” he added.

News reports yesterday claimed that a decision on whether to sell the national carrier will be taken tomorrow. However, Treasury Secretary S.R. Attygalle, speaking to The Morning yesterday, denied these claims.

The Morning further learnt that the Treasury Department has said that it will not be providing any further grants to SriLankan Airlines.

“I do not know about that either,” said Attygalle, when questioned about it.

In May 2019, the committee headed by Eran Wickramaratne submitted its report on restructuring SriLankan Airlines to the Cabinet of Ministers and the report was approved. However, the status of that plan is unclear, following the change of government in November that year.

SriLankan Airlines was launched in 1979 as Air Lanka and was partially acquired by Emirates in 1998. However, it was reacquired by the Government of Sri Lanka in 2008, during the first term of Mahinda Rajapaksa’s presidency. The recorded financial losses since then have garnered the criticisms of many economists.

According to a report by the COPE, the operating loss suffered by SriLankan Airlines was Rs. 4.4 billion in 2008, when Emirates withdrew from the management of the airline. A total of 14 aircraft, comprising five A320 aircraft, four A330-200 aircraft, and five A340-300 aircraft, were operated by the company at the time. SriLankan Airlines’ loss during the 10-year period from 2009 to 2019 was Rs. 240 billion.

In addition to the losses incurred, the total value of loans owed by SriLankan Airlines to state banks and state institutions including the Ceylon Petroleum Corporation (CPC) runs into the billions of rupees. Attempts have been made to restructure over a $ 400 million debt owed by the national carrier to the two main state banks, Bank of Ceylon (BOC) and People’s Bank, but it is unclear whether discussions held in this regard proved successful. SriLankan owes about $ 220 million to BOC while it owes about $ 187 million to People’s Bank. In addition to this, SriLankan’s fuel bill to CPC stood at $ 275 million.

It was announced by Indian media last month that India’s corporate giant Tata Sons is taking over the country’s loss-making national carrier Air India in a $ 2.4 billion deal. The deal is set to return Air India, which loses about $ 1 billion a year, to its original founders 68 years after it was nationalised by the post-Independence government. The sale – due to be completed by the end of December – fulfils a promise made by Prime Minister Narendra Modi’s Government, after its previous attempt at privatisation in 2018 failed to attract a single bidder for the carrier.

Crucial COPE-SriLankan meeting postponed