10 August, 2020

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SriLankan Airlines – Expensive Toy Of Our Politicians

By Rajeewa Jayaweera

Rajeewa Jayaweera

Rajeewa Jayaweera

The Prime Minister, at a recently held press conference has stated “cabinet has decided to defuse economic land mines without allowing them to explode and one of those mines is SriLankan Airlines”. Having said that, he has reportedly recommended to the cabinet of ministers, the absorption by the state of the national carrier’s carried forward debt amounting to Rs 461 billion (USD 3.2 billion).

During the same press conference, a senior minister for Special Projects has stated, the ideal arrangement will be to convert the national carrier into a public-private partnership having a 60% stake with the government and 40% stake with the private sector. He has quoted the 1998 agreement with Emirates. He has supposedly further stated the logo of the airline will not be changed.

It is also reported, the Deputy Minister of Power & Renewable Energy has stated at a media briefing, the government will keep the ‘right to administer’ the national carrier though a stake of it will be given to the private sector and it will be converted into a private public partnership. He has also stated, “Government will continuously control SriLankan Airlines despite the conversion of it into a private public partnership”. He has further stated the changing of the logo and name of the airline lies with the new management and the government is not looking at retrenching existing staff of SriLankan Airlines. He has given an assurance the privileges enjoyed by the 6,700 employees would not be changed.

One is bewildered. Why is a senior minister for Special Projects and Deputy Minister of Power & Renewable Energy making such statements in the first instance? Should not such announcements be made by the Prime Minister, the line minister in charge of SriLankan Airlines (in this instance Minister for State owned Enterprises) or the cabinet spokesman? Since the senior minister for Special Projects made his comments in the presence of the Prime Minister, it has to be assumed all that he said has prime ministerial endorsement.

The previous exercise of privatization in 1998 was on the basis of 51% by the state, 40% by Emirates and 9% by staff. Both the global aviation industry and the world is aware of the manner in which the exercise ended with the CEO being virtually deported as a result of his refusal to agree to a request to off-load the entire Business class cabin to accommodate a presidential delegation. Investors and airlines the world over is well aware of what a Sri Lankan government is capable of as a majority shareholder even without management powers. As such, what is the wisdom of such statements, especially at a time the search is on for a foreign investor / management company?

It is rumoured, the government is in the process of preparing a RFP (Request for Proposals) outlining requirements from outsiders wishing to invest as well as manage the loss making airline.
Changing of name and logo of any company is not a matter for politicians but for those managing the company. Companies periodically undergo a process of rebranding, especially when a name and logo is associated with poor performance and a need exists to relaunch the product.

No loss making company ever came out of it without downsizing staff strength. SriLankan Airlines’ current manpower to aircraft ratio is a whopping 340 staff per aircraft when international industry norm is around 150 – 175 employees per aircraft. Some of the rights won by employees through CBAs (collective bargaining agreements) negotiated by previous managements are thoroughly unsuitable and will not be tolerated by any foreign company. Two such examples are; Technical and Cabin crew are provided transport to and from their homes even as far as Gampaha, Panadura etc. This practice, at times requires more than one vehicle to be deployed to pick up / drop crew for one flight. The annual cost of crew transport exceeds LKR 300 mil. No other airline is known to provide such a facility. Ridiculous allowances negotiated by the FAU (Flight Attendants Union) such as Special Premium Allowance, End of Year Payment, Attendance Incentive up to 150% of Basic Pay if 14 days Sick / Casual Leave is not utilized, Tea and Meal Allowances even during flights when cabin crew are provided with tea and meals and Productivity Payments ranging from USD 6.50 to USD 20 per block hour paid simply for reporting for work. To encourage continuation of such practices by making such statements is to be grossly irresponsible.

Is it this government’s contention the prospective new investor / managing company should continue such unhealthy practices? If that be the case, what would be the purpose of this whole exercise? The privatization exercise must be evaluated not in the context of employees who will lose privileges or be rendered unemployed but in the context of the Rs 461 billion ‘economic landmine’ the Prime Minister has now decided would be underwritten by the Treasury a.k.a. every man, woman and child in this nation will pay Rs 21,952 per person.

Lessons can be learnt from the manner Air Ceylon handled its retrenchment program in 1978/9. A former SriLankan Airlines colleague, who had been General Secretary of Staff Officers Union at Air Ceylon, narrated to this writer, the agreement reached with Prime Minister JR Jayewardene. He had agreed with the unions, the new airline would absorb maximum possible number of staff. The government would find alternate jobs in other Government bodies for some other staff. The rest of the staff would be paid compensation according to existing labour regulations. Their privileges were gone for ever.

It is abundantly clear from the said statements and several other statements by politicians in the recent past, this government and ministers have no intention of giving up their “right to administer”. Their intentions are crystal clear. They wish to interfere in relatively minor issues such as the name and logo of the airline as well as in more serious issues such as reduction of staff, removal of staff privileges etc., their inexperience and ignorance in such matters notwithstanding. The “right to administer” need be removed at all costs. If not, the airline will continue to be an expensive toy available to our politicians for abuse and misuse.

It is necessary for the state to understand, the failures of Air Ceylon, Air Lankan and SriLankan Airlines was chiefly due to mismanagement of the carriers by successive Governments, self-serving politicians and the incompetent minions appointed by them since 1947. It is now time to think ‘out of the box’. After 69 years of continuous close involvement and ‘right to administer’ the three carriers, would it not be wise for the state to take a back seat and play the role of a minor shareholder with no more than 15% of equity? It has worked in many other countries and could very well work in Sri Lanka as well.

Furthermore, it would be the only way to avoid the need for the state and by extension, the people having to underwrite losses amounting to billions of rupees, for the third time once again thirty some years in the future.

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Latest comments

  • 11
    0

    Only those employed by this gigantic fraudulent giant conglomerate benefit from it – not the people of the Sri Lanka who are contributing to the welfare of these pampered employees.
    Nishntha.W has got away with all the harm he did – with no inquiry at all.
    No other airline will partner this Sick Giant.

    Sack the inefficient staff with some compensation, and restructure the management.

    It appears that the PM expects all citizens to continue to prop up this ‘rotten apple’.
    Why?

  • 5
    0

    How about the Trains.

    As Indian Politicians do, Sri lanka also have free train service on the may day.

  • 6
    0

    We all know that majority of ministers have no clue and best they keep their mouths shut to avoid humiliation and embarrassment.

    Sri Lankan has been a “toy for boys” for many years irrespective of govt in power. Yahapalanaya govt did no better when the board members were appointed. MARA went to extremes by appointing his BIL and allowing him to use the resources and staff for all his needs.

    It is abundantly clear that govts cannot run commercial enterprises and yahapalanaya govt is no different. Unfortunately you need the guts and balls to make decisions in the interest of the nation.

    Sri Lankan should have been given to private sector management 12-15 months ago and we would have saved atleast Rs 10 billion. Current losses are Rs 1 billion per month for Sri Lankan when oil is at USD 35 per barrel.

    Airbus order is 7 A 330s and 8 A 350s of which I understand that 4 A 350 s have been cancelled. God only knows as to how we are going to pay for the rest of the aircraft. The only attraction for a foreign airline is the access we have to India and some slots we have in European airports. Our passenger business have been running at a loss for many years and hence nothing much to offer. It is unlikely that GOSL will bundle maintenance and ground handling and catering together with the airline to be offered to a foreign party.

    We have to clean up the balance sheet for any JV partner to be interested and hence massive amounts of debt and losses have to be picked up by the tax payers. That is Rs 400 billion + in debt without the new aircrafts debt and another Rs 100-200 billion in losses brought forward.

    Rajeewa has correctly pointed out that staff has to be pruned down to manage able levels and some of the perks cut and this is unavoidable. Pilot salaries at Rs 2-3 million and stewardesses at Rs 500,000 per month is not possible.

    Ranil has to be bold in the interest of the nation and not burden the poor any further.

  • 5
    0

    This is what was said earlier. PM has not closed the door for corruption but make the people pay for politicians sins. At this rate, people of this country are deemed fools who are compulsively made to pay for all the blunders and robbery of their wealth by these so called politicians. They have the constitutional right to cheat the public.

    Civic rights of all such politicians and immediate families should be removed along with their earnings and properties earned.

  • 6
    0

    Editor-CT

    Is it possible to take a break from publishing news on SriLankan and what RW and the government intends doing about it.Mr.Jayaweera can keep on writing till end of the world but to no avail.Most of the readers who respond to these articles are quite knowledgeable and their comments make lot of sense which unfortunately is lost on Politicians.

    One thing is clear.RW may have wanted to write off USD3.2 Billion paving way supposedly for privatization and hence anoint himself as the savior of the Airline but the way things are progressing he too will leave a colossal amount of debt for the next Government to worry about. This would be the legacy of RW and Yahapalanaya as well.

  • 2
    0

    SriLankan’s history and toxicity is well documented, and well known in the industry, and the business world. Nobody will take on the management of SriLankan without the freedom to carry out a root and branch re-organisation, among other, of staffing and benefits. Therein lies the crunch. The staff unions will not agree to any change. The politicians in power will not agree to giving up any meddling rights.

    WE the people will have funded this charade to the tune of $3 million plus and counting…

    Under these conditions, any private investor will be the the pig in what will be a ‘full-English-bacon-and-eggs’ business.

    Foreign, or private investor; fools rush in where angels fear to tread.

    • 1
      0

      Millions???? Must be the Sunday lunchtime something in my gin and tonic.

      Anyway, a Million, a Billion (or three). What’s a few millions between friends?

      If the worst comes to worst, SriLankan can give up its Airbuses and instead revert to a fleet of Dandu-Monara chariots. Up Up and Away!

  • 2
    0

    Many articles and Wright ups on SRILANKAN airlines and Airbus deal , is it only the ex Chairman and CEO who was a part to the A350 order , or are there more management members who were a part of it but still sitting pretty and contributing to the disaster , why isint any action taken on them , did srilankan also had a senior management team who nodded for every proposal that was brought by ex Chairman and CEO , if so are they still in the management and are they fit enough to be there , I feel it’s not correct to blame only the ex Chairmanand CEO , but act on the contributors as well .

  • 4
    0

    Hamm….. After spending 15 months of study the Government of Maithri/Ranil has decided to pass the debt load of US$ 3.2 billion to the PEOPLE of this country. This decision must be recorded in the book of Guinness World Records. In discussing the massive debt load,the PM, reportedly said, the SrLankan Balance Sheet has been loaded with the debts of Mihin Lanka. How much of that is not known. Even from the start of that Budget carrier, it was making massive losses and came up for discussion in the Parliament when the PM was the then Leader of the Opposition. Who handled the entire operation of that outfit from the beginning? We know how the then CEO and Chairman of Mihin Air, laundered money in billions through his wife’s company registered in Singapore and how he committed the airline to raise loans at exorbitant interest rate of 18% and finance his operations in a company named “Cosmos”. Also how he purchased Ground Handling equipment and rented those to Mihin Air and made a fortune. WHERE IS HE TODAY? He has become the LAP DOG of Maithri/Ranil & Co. and commute around the country under MSD Security with “Back Up” vehicles. In the end ALL that money one man SIPHONED out from a Public Venture is “DIRECTED” to be borne by the PEOPLE of this country. That is the meaning of TAKING OVER the US$ 3.2 billion by the Government. Did the 6.8 million people VOTE this Government to do that? Therefore, shouldn’t this “Majestic Decision” be recorded in the Guinness Book of World Records?

  • 0
    0

    ” SriLankan Airlines – Expensive Toy Of Our Politicians”

    sex toy for the former chairman nishantha wickremesinghele
    get it up baby get it up
    get it up baby get it up.

  • 1
    0

    Majority of these comment makers are Sri Lankans living in overseas, flying foreign airlines and not Sri Lankan. So my humble request is don’t be so patriotic while being a Citizen or a PR holder of another country and bark for Sri Lanka’s good will. If you really want to contribute to the country come and work here, live here!… Those who work in SriLankan Airlines know how much governments have misused them. The best model is give 100% shares to another party and manage it by them so no government will ever own this airline. This can not be categorized as non patriotic!… It is indeed patriotic as we are trying to save the national airline from being misused by the ruling party!!!

  • 0
    0

    People say including politicians Airline had profits during emirate regime. But most of them don’t know that Airline had its own aircraft before emirates took over. But after 2008 airline had nothing. Emirates sold them all & re-leased. Most of the employèes worked that period still working. They are the people who brought profits to the airline. Still they can do that with proper management with out political influences.

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