Going global the local way

LEADERSHIP roles can change swiftly, but the results can pose challenges for sustainability and growth. The recent change at the top of SriLankan Airlines (SLA) is one such instance.

Ending weeks of speculation, SriLankan Airlines in a brief statement last Thursday announced that Kapila Chandrasena, current CEO Mihin Lanka, had been appointed as Chief Executive Officer Designate of SriLankan Airlines with immediate effect. Chandrasena will assume the role of CEO from 1 August 2011 from the current CEO Manoj Gunawardena, whose term in office comes to an end on 31 July 2011.

The announcement follows the SriLankan Board on the previous Wednesday night making a final decision on the future CEO of the national carrier. Chandrasena has been a member of the SriLankan Airlines Board since the 2009/10 financial year. Though CEO of Mihin, Chandrasena hails from a telecom industry background locally and internationally, with his last stint as Chief Marketing Officer of SLT.

Historically, top positions in public institutions have been politically motivated. Concerns that the future CEO is not from an industry background can be sidelined if professionalism is exercised and the Board together with the rest of the management ensure that the professionals within the organisation use their expertise constructively.

The change came a day after the fully-Government owned SLA announced that its fleet had grown to the biggest-ever in the national carrier’s history, with the receipt of the 17th aircraft, whilst the addition of five more Airbus aircraft is on the cards. It is clear that change at such a historic point could cause tension if not managed properly and smooth transition is a must for the increased responsibility to bear fruit. The talk within airline circles was that Gunawardena, who has near three decades of experience and expertise in serving the national carrier, opted out because of too much interference. Others point to below potential performance of the airline as the cause.

According to the Central Bank Annual Report, passenger traffic carried by SLA increased by 24.5 per cent in 2010. Bandaranaike International Airport (BIA) handled the highest-ever transhipment freight of 26,445 metric tonnes in 2010, recording an increase of 43 per cent compared to the previous year. The total air cargo handled also increased by 20.3 per cent compared to the previous year. The air cargo handling capacity was doubled during the year with the addition of a new export terminal. The current capacity stands at 300,000 metric tonnes of cargo per annum.

It goes on to say that the financial performance of the aviation sector was favourable in 2010. The revenue realised by SLA increased by 26.3 per cent to Rs. 67,835 million, while the operating cost increased by 12.4 per cent to Rs.74,107 million, resulting in an operating loss of Rs. 6,272 million, which was a decrease of 49 per cent compared to the previous year. The increase in revenue and the implementation of stringent cost control measures contributed to the reduction of the operating loss of SLA. Meanwhile, Mihin Lanka recorded an operating profit of Rs. 416 million in 2010 compared to the operating loss of Rs. 666 million incurred in 2009, under Chandrasena’s leadership.

Of late the Government has been inspired by the Singapore model, which is one of the reasons for State taking over utilities and other strategic ventures. But what they often forget is that even though the Singapore Government owns strategic enterprises, the management is allowed to function without interference – a situation that is yet to materialise in Sri Lanka.

The SriLankan Airlines Board certainly has private sector leaders and in the new arrangement, the senior management team must be empowered. Change can be positive only if it is handled carefully and SLA has the additional responsibility of flying the national flag high. Passion, which the board may have a good dose of, is important; but professionalism is what differentiates it from the ordinary. As the national carrier embarks on a new global journey, let’s hope it will fly to greater heights with exemplary professionalism.