MTI recalls turnaround of SriLankan Airlines under Emirates
By: Staff Writer
Colombo (LNW): Sri Lanka government has to look back on how the SriLankan Airline had transformed to a profit making venture in 2005 by vesting its management with the Emirates Airline, leading consultancy agency said.
If you think the current business environment for SriLankan Airlines is tough, you should revisit 2001.
In July that year, the Katunayake airport was bombed, in September 9/11 happened, dealing a double blow to the island nation’s aviation and tourism industry. It could not get any worse for an airline, but under Emirates management the airline did turn around. MTI Consulting, an international management consultancy firm said.
Based on the Strategic Planning work done by MTI Consulting for SriLankan, the case study of the airline’s turnaround was publicly presented in 2005.
MTI Consulting looks back on a similar turbulent period in the airline’s recent history – in which the national carrier ‘weathered the storm and headed into clear skies’.
The airline’s bottom-line was ‘in the red’ following successive years of massive losses; a loss of Rs. 750 million in 2000 and Rs. 6.5 billion in 2001.
The airline had also lost half its fleet as a result of a terrorist attack at the Katunayake Airport in 2001 and the global airline industry was in the doldrums following the 9/11 terror attacks in USA.
Adding to these woes, the airline was also facing a number of internal challenges. These included flying to unprofitable routes, unsuitable aircraft mix, low yields and low selling prices – as well lack of focus on product development, brand management and emerging channels.
In this environment, the Strategic Planning Exercise was initiated with the short-term intention of improving profitability of the airline (to $ 48 million by 2005) and the long-term intention of being the most preferred airline in Asia.
However Sri Lankana Airlines phase 1 restructuring process is to be completed by end 2023 process following the government’s plan of divestment of the national carrier and its subsidiaries.
The Cabinet has approved the divestment of Government-owned shares of SLA and International Finance Corporation has been appointed as the sell side transaction advisors.
It is expected that the initial due diligence and divestment strategy (phase I) will be completed by the transaction advisors by the end of December 2023 and phase II of the engagement to execute the transaction would take a further six months.
Aviation Minister Nimal Siripala de Silva disclosed that several foreign investors have already expressed interest in taking over the management of the airline but didn’t name them. It has been speculated that a major airline operator in India was among the possible investors in the national carrier.
The talk of the town these days is that Tata Sons which took over India’s Air India last year and rebranded the airline is showing some interest in taking over the Sri Lankan Airline.