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Thilan Wijesinghe tipped to chair SriLankan interim board
With the Government accepting the resignations of the Board of Directors of the troubled SriLankan Airlines, a new interim team was preparing to take over amidst a shake-up in the airline’s top management, informed sources said.
“A new team will take over soon,” a source close to the officials involved in the restructuring process said, adding that Thilan Wijesinghe, Chairman of the National Agency for Public Private Partnerships and convenor of the officials committee involved in a restructure of the airline, is tipped to chair the interim SriLankan Airlines board-level panel.
This process will happen probably within days after the current directors are formally sent letters accepting their resignations.
All the directors but one — Ajith N. Dias (Chairman), Rajan Brito, Chanaka de Silva, Mahinda Haradasa, Rakhita Jayawardena (Executive Director – Compliance and Communication) and Niranjan De Silva Deva Aditya — sent in their resignations a few weeks ago. The exception was Harendra K. Balapatabendi. While there is no immediate information about Mr. Balapatabendi’s status, it remains to be seen whether he would be included in the new interim panel or asked to step down with the other directors.
The airline’s CEO Suren Ratwatte was expected to continue during this interim period, these sources said. The airline which has barely managed to stay afloat has been struggling with accumulated losses from management issues by the previous regime, coupled with a massive compensation payment owing to a decision to cancel new Airbus orders and management issues in recent years too.
The sources said that most of the problems at the airline over the past three years were as a result of repeated clashes and disagreements between two ministers – Ravi Karunanayake (when he handled finance) and Kabir Hashim (whose Public
Enterprises Ministry is responsible for the restructure of troubled state companies).
Also being questioned is the 100 million-rupee plus assignment in mid-2016 to National Savings Bank as the lead manager appointed by the Cabinet, in finding an international investment bank to handle the restructure exercise. Concerns were raised since NSB did not have expertise in this field, and close to two years later no proper management or equity partner has been found.
Concerns have also been raised at the extent to which board members and some senior management have availed themselves of complementary airline tickets and other benefits. Minister Kabir Hashim, who has repeatedly confessed that he is not kept informed of decisions by the airline board, on Friday confirmed in a media statement that the resignations of the board of directors had been accepted.
The interim team will include members of the officials committee involved in the restructuring process. The sources said some changes in the top management at the airline are expected. “The interim team of officials will continue with its restructuring mandate and supervise the management in the hands of senior management once changes are made,” the source said.
Other Government sources said the interim board-level management team would remain until the airline was restructured and the new owners or managers appointed their own board of directors. The Cabinet Committee looking at restructuring of the national carrier is chaired by Prime Minister Ranil Wickremesinghe and includes ministers Kabir Hashim, Mangala Samaraweera, Dr. Sarath Amunugama, Nimal Siripala de Silva and Malik Samarawickrama. The Officials Committee assisting the ministers comprises Finance Ministry Secretary H.S. Samaratunga (chairman), Public Enterprise Development Ministry Secretary Ravindra Hewawitharana, Thilan Wijesinghe (convenor), SriLankan Airlines Chairman Ajith Dias, Finance and Media Ministry Senior Advisor Mano Tittawella and Central Bank Director Dr. Roshan Perera.
Meanwhile, the Cabinet Committee on Economic Management (CCEM) has decided to complete the restructuring programme of SriLankan Airlines under a Public Private Partnership (PPP) within six months. The decision was taken this week at a CCEM meeting chaired by Prime Minister Ranil Wickremesinghe.
Minister Hashim told the Sunday Times that a Committee comprising ministry scretaries had been appointed to workout the details of the PPP. “Treasury Secretary R.H.S.Samaratunga will head the Committee which will be entrusted with the re-structuring programme and also the task of reducing the airlines’ losses.
The Sunday Times learns that the CCEM also decided to appoint another Committee under Dr Samaratunga to re-negotiate with the Airbus company regarding the proposed purchase of eight aircraft. The CCEM had decided to halt the purchase of four of the aircraft. With regard to the other four which are being built, the CCEM decided to find a suitable method to resell them to another company or airline or for Sri Lanka to lease them.
The decision to move for a PPP proposal came in the wake of abortive attempts to find a suitable company to take over the airline. Among the airlines Sri Lanka has negotiated with are Qatar Airways, Emirates, Japanese Airlines and AirAsia. National Agency for Public Private Partnerships Chairman Thilan Wijesinghe told the Sunday Times that SriLankan Airlines suffered an annual loss of Rs five billion.
He said the airline currently had a debt of US$ 750 million which was a burden and therefore was looking at a PPP to make it a profitable institutions. “The restructuring of the airline will help to improve the value of the airline even if we have to consider the sale of the airline subsequently,” he said.
Mr. Wijesinghe said the catering section and the ground handling section were profitable and the airline would be able to pay the loans from the profits gained from these sections.
He said the annual turnover of the airline was around US$ 1 billion and if they were able to improve the turnover to US$ 1.5 billion the airline could be made profitable. He said the lease agreement signed by the previous government to purchase eight aircraft had contributed to the heavy losses.