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Wednesday, 11 February 2015 00:45 - - {{hitsCtrl.values.hits}}
Ports, Shipping and Aviation Minister Arjuna Ranatunga has appointed a Board of Inquiry (BoI) to report on any abuse of power by the Chairman and Board, as well as violations of rules and regulations, in national carrier SriLankan Airlines between 2006 and 2014.
The BoI will be headed by law
yer and anti-corruption activist J.C. Weliamuna while four other specialists will be appointed. The BoI has been given comprehensive terms of reference and has been told to submit an initial report at the earliest and final report by 30 March 2015.
The national carrier has had different chairmen and directors on the Board and senior management since 2006. Among the Board members were President’s Counsels, top and highly respected business leaders and other professionals. Until 2008, Emirates was managing SriLankan Airlines under a 10-year deal and its termination followed the sale of 43.6% stake back to the Treasury.
The then Opposition has been highly critical of the way the national carrier was managed during the regime of President Mahinda Rajapaksa. It was often alleged that the national carrier was being used as the private property of Rajapaksa.
The carried forward losses of SriLankan Airlines by FY2013/14 had deteriorated to Rs. 110 billion from a profit of Rs. 9 billion in FY 2007/2008. SriLankan Airlines has been regularly questioned by the Committee on Public Enterprises (COPE) and the management of the day has cited various reasons for the losses including high fuel prices (over the past decade, jet fuel prices have risen by a staggering 242%) as well as other industry issues etc.
As per the Terms of Reference, the Board of Inquiry will record and report any prima facie evidence of abuse of power by the Chairman, Board of Directors and senior management during the nine-year reference period.
The Board will also scrutinise any irregularities in procurement or leasing of aircraft, (SriLankan last year finalised and began a re-fleeting program costing $ 1.3 billion); examine and report whether any procurement of goods and services worth over Rs. 25 million had been conducted following due process or not. Another mandate is to report on any external interference preventing the smooth functioning of the national carrier.
Nishantha Wickremesinghe, the brother-in-law of President Rajapaksa, served the Board since January 2006 and was appointed Acting Chairman in September 2008 and full-time Chairman in June 2009. Current CEO Kapila Chandrasena was appointed to the Board in December 2008 and as CEO in August 2011. Previously Manoj Gunawardena was the CEO.
As per their FY13/14 Annual Report, SriLankan Airlines at the company level achieved revenue of Rs. 121.5 billion, up from Rs. 119.5 billion in the previous year. Pre-tax loss was Rs. 32.3 billion, higher in comparison to Rs. 26 billion. At the group level revenue was Rs. 124 billion, up from Rs. 121.4 billion and pre-tax loss was Rs. 31 billion, as against Rs. 26.8 billion in FY12/13.
In 2012, the Government approved an investment of up to $ 500 million over a period of five years. In fulfillment of this undertaking, the then Government provided capital infusions: 2012 - Rs. 14.3 b; 2013 - Rs. 12.6 b, and 2014 - Rs. 19.6 b. The Government also provided a guarantee for a $ 175 m bank facility in 2012 and another guarantee of $ 50 m against a $ 150 m bank facility in 2014. The plan was to invest a further $ 125 million during 2015/16.
The new capital infusion was following approval of the five-year business plan which included re-fleeting that began in late 2014.
From a fleet of 21 units comprising eight Airbus A320-200s, seven Airbus A330-200s and six Airbus A340-300s, the plan envisaged the replacement of the A340-300s and the A330-200s commencing in 2014, with six A330-300s and seven A350-900s respectively.
As per the 2013/14 Annual Report, with the conflict prevailing in Sri Lanka up to 2009, no major additions were made to the fleet, which stood at 12 units. However, fleet augmentation began in the 2010/11 period with the addition of two units bringing the total to 21.
The airline said this constituted a near 100% increase. What fuelled this need for capacity addition was the fact that whilst the route network grew marginally (to 32 destinations), in response to demand, frequency was increased with more flights per destination as the desired outcome. Thus flight frequency increased from 7,505 in 2010/11 to 12,399 in 2013/14. Passenger numbers increased from 2.9 million in 2010/11 to 4.2 m in 2013/14 and the passenger load factor increased from 77% to 81% during the same period.
The airline said an increase in passenger numbers was driven by an almost doubling of tourist arrivals consequent to the return of peace in the country and the numbers also reflected both people whose destination was Sri Lanka (point to point) as well as those transiting Sri Lanka and travelling on to other destinations in their network. The airline joined oneworld, the world’s fastest growing and most highly-rated global airline alliance in May last year.
