SriLankan storm over CEO Hill intensifies

COLOMBO – With his work visa revoked, Emirates-appointed SriLankan Airlines CEO Peter Hill appears to be fighting for his job – along with a little help from his friends.

As reported in TravelMole Asia on December 20, Sri Lanka canceled Hill’s work permit after the national carrier refused seats to President Mahinda Rajapaksa and his entourage.

Rajapaksa went on a private visit to the United Kingdom in December to watch his son’s graduation from a naval college but couldn’t get a place on the flight home because of heavy holiday traffic.

The Sri Lankan government says the airline “misled” it and had promised seats to Rajapaksa and his 35-member entourage – which airline sources deny.

When the Sunday Times in Sri Lanka contacted 62-year-old British national Hill last week in Dubai to ask him whether it was true that the Emirates airline had served a letter of demand on the government of Sri Lanka through a leading local legal firm, he said he was not aware of what action his parent firm was taking over his expulsion.

Emirates is backing Hill to continue to serve as SriLankan CEO from Dubai till the management contract runs out in March.

Meanwhile, according to the Sunday Times, the national carrier is said to be suffering a severe brain drain due to unprecedented cost-cutting exercises introduced in recent months.

Its future is now in doubt with public acrimony breaking out between the government and the airline’s major private shareholder, Emirates.

In the last two months, insiders revealed to the Sunday Times that at least 14 pilots and 10 engineers had resigned from the airline and at least five more engineers and 10 more pilots were scheduled to leave in the coming weeks.

Emirates president Tim Clark and director Garry Chapman were due in Colombo yesterday for what some aviation sources termed as “break-or-make talks” with the Sri Lankan government on the renewal of its existing 10-year management contract with Emirates scheduled to expire in March.

The Sunday Times reported, “Many have pointed out that the existing contract is highly disadvantageous to Sri Lanka and the opposition UNP came to power in 2001 vowing to renegotiate the contract, but it soon backed down when Clark insisted that “a deal is a deal”.

“There is some speculation whether the reverse UNP decision came after some key people enjoyed some Arabian nights in Dubai.

“Though the Emirates management of SriLankan has been crowing about how they managed the airline without a single cent from the Sri Lankan Treasury since they assumed the management of the airline, and how they even returned profits in most of those years, critics counter these arguments by simply pointing out that they had achieved such results by selling the national carrier’s own aircraft.

“At the time of the privatisation SriLankan owned nine aircraft, including five nearly new Airbus aircraft. It now owns just one aircraft, while all others are leased from other airlines.

“Critics claimed that at the time of the privatisation the airline had already been turned around and was earning profits under the stewardship of chairman Harry Jayawardena.

“They said it was not Emirates that should be punished, but the so-called Sri Lankan experts and Treasury big shots who negotiated the lopsided agreement to the disadvantage of the country.

“There are so many hidden disadvantageous clauses which are not in the main body of the contract, and one such clause stipulates that if at the end of March the government does not buy back the 43.6 per cent stake in SriLankan held by the Emirates, it automatically gets to manage the airline for a further five years.”

The newspaper indicated that there was speculation that Jayawardena, who continues to be the government-appointed chairman since privatisation, might bid for the airline if the existing management contract with Emirates is not renewed.

Further, the newspaper said it is alleged that Jayawardena, who has benefited by the airline “throwing several hundred million rupees worth of insurance business to his firm, Sri Lankan Insurance”, has generally ignored any wrongdoings by the Emirates management.

Prior to crucial talks with Emirates hierarchy, president Rajapaksa summoned a meeting with the national carrier’s powerful Pilots Guild.

In recent months, according to reports, it is the pilots who have been blowing the whistle on alleged crony management practices of top managers of the national carrier.

Source: Sunday Times