(Daily FT) Consultants outline restructuring plans for SriLankan

British consultants tasked with salvaging SriLankan Airlines yesterday presented their first report to the Ministerial Committee headed by Prime Minister Ranil Wickremesinghe, expressing confidence in restructuring and finding a partner airline to turn the national carrier around, a top Government official revealed.

The Nyras Consulting Company specialising in the global aviation sector, which was hired by the Government to advise it on initiating a restructuring program and securing an investor for the troubled national carrier, presented its preliminary report yesterday outlining the broad framework for restructuring. “The consultant was very positive about the restructuring and turning the airline around and finding a partner,” a top ministry official who declined to be quoted told the Daily FT.

The consultants outlined a restructuring program under five broad areas – managing the right size and type of aircraft fleet, debt restructuring, tax concessions, network rationalising and fuel price – to restructure and improve its financial position.

While both ministers and officials who were present at the meeting had no question on the course of action, they raised doubts to determine the practicality of the plan presented, an official who was present at the meeting told the Daily FT.

“The consultant company was confident that the airline could be restructured to ensure that finances improve. Their plan is to first improve the finances and then lobby for an investor to partner the airline once the restructuring creates a good environment to attract an investor,” the official said.

SriLankan Airlines, which has been making losses continuously since 2009, recorded an annual loss of $ 181.2 million for the financial year ending March 2017 compared to the previous year’s $ 78 million, according to a statement issued by SriLankan in June this year.

Further, the company is also in the midst of renegotiating terms to exit the second part of a $ 2.5 billion Airbus order to re-fleet its ranks brokered by former president Mahinda Rajapaksa’s administration. Earlier this year the Government paid $ 98 million dollars to cancel four other aircraft under the same order.

Both the Ministerial Committee and the Officials Committee were initially satisfied with the recommendations of the consultants. The Officials Committee will also prepare a report on the restructuring road map presented by Nyras, recommending the next course of action to the Ministerial Committee, the ministry official stated.

“What was presented today was the initial plan and no one has found fault with that since the consultants were appointed by the Government as well. The Ministerial Committee is likely to go ahead with the plan,” he said.

---

 

SriLankan to be taken up at next Economic Council

Critical of the performance of SriLankan Airlines’ upper management, Cabinet Co-spokesperson Rajitha Senaratne said the fate of the troubled airline was to be discussed at the next National Economic Council meeting headed by President Maithripala Sirisena.

“There is time till March next year to decide on the matter. The President will take the matter up at the next National Economic Council meeting,” he said.

The Minister also said that the members of upper management who were recruited to help turn around the national airline had failed to deliver the expected results, suggesting a cleanup within the top ranks was in order.

“They were appointed with salaries as high Rs. 3 million to turn the company around and make profits. They shouldn’t have been recruited if not but they have failed. They have stated that workers should get ready to leave their jobs; it’s not the workers who should go but they should be removed first,” he asserted.

“The reason for us to retain these professionals paying such high salaries was to turn things around and make profits. At the rate they are going they shouldn’t have been paid even Rs. 300,000.”

The Minister said that the Government would have to take immediate action using a top-down approach.

Source: Daily FT

Image Courtesy:  Sunday Observer