SriLankan Airlines Chairman Ajith Dias speaks out

Business leader and SriLankan Airlines Chairman Ajith Dias in an exclusive interview with the Daily FT speaks about his appointment, the performance of the National Carrier, recent decisions made, its challenges and the future. He also responds to some of the allegations against him and the National Carrier. Here are excerpts:

By Nisthar Cassim

Q: SriLankan Airlines is a company that was thought to be beyond salvation. What made you take on the job and how have you gone about it? 

A: Yes, that perception was quiet common and it is true as well. SriLankan was one of the biggest loss-making State enterprises. It was mired in controversy, there were allegations of massive wrongdoing and it was overstaffed. I knew all this when the Prime Minister asked me to take over SriLankan Airlines. 

I had at the time more or less exited from an active role in my businesses and was told that having done well for myself, I should serve the country for a few years, in this case to get the airline sorted out. I was well aware that I would have to give up the rather leisurely lifestyle I was enjoying. But I felt honoured and took it on because I’ve always relished a good challenge and this was as big as it could get in Sri Lanka. 

There was nothing magical about my approach. I did what was rational. It’s always a matter of taking the trouble to understand the nature of the problem, studying all aspects, assessing the strengths, identifying weaknesses, being aware of where we stand, figuring out where we should plan to be and to design short-term, medium-term and long-term strategies to get there. 

There was a lack of international experience in running the airline, so we advertised for several key positions. There were many responses, and after a lengthy interview process decided on several ex-SriLankan employees who had ventured abroad and held high positions in other airlines. This was also in keeping with the Government policy of encouraging those who have left the country to return and support the development initiatives. 

The issue was to convince them to work for much less than they got overseas and to join an airline which was in serious trouble. I have to say that their beginnings with SriLankan and their desire to give the benefit of their foreign experience to the place where they had started was a big factor in their decisions.

Q: But SriLankan is still in the red.

A: Yes. I never thought it would be easy and neither did I say it would be easy. There are issues that the new management inherited which we really can’t wish away. There are massive loans that have been taken. We can’t stop paying interest on them just because some other people signed those papers. 

It’s the same with the issue of ordering new and unnecessary aircraft at premium prices. There are allegations of people making a lot of money in the process. But that’s not relevant to us. There are investigations and if someone did something wrong, then it will all be revealed and action would be taken. As far as we are concerned, we cannot do much about purchase agreements, and some of the strange contracts that have been signed even into the future.

My job is not to whine about bad decisions that others took but to find solutions to the problems we inherited. The Board of Directors and I had to bring back rational decision making, keep the staff abreast about what needs to be done and to obtain their fullest support to turn things around.

Our policy is simply one of being firm but fair. The management has made the changes necessary to ensure transparency and have put in place several procedures and processes which have helped stabilise the company and deliver better results. We have achieved a 29% reduction in our deficit where the benefit from the fuel cost was a major contributor. There was also a significant reduction in procurement and fees paid to service providers, while an increase in productivity all round also helped reduce the losses. 

Our loss of Rs. 11.6 billion includes an interest burden of Rs. 6.1 billion due to the inherited losses we are subjected to and includes the compensation of Rs. 2.5 billion paid for the cancellation of a lease for an unnecessary aircraft. This has largely overshadowed an otherwise strong improvement in the operating loss by 70% compared to the previous year, which will be addressed by the Government decision to absorb the outstanding debt. 

Our fully-owned subsidiary in catering enjoyed its best year ever, posting a profit of Rs. 3.69 billion, and our engineering and ground handling units as well as the aviation college made good financial progress.

Q: There has been a lot of criticism of the previous management of SriLankan Airlines. There’s also criticism of the current management as well, you in particular. What do you have to say about allegations of receiving an exorbitant salary and conferring on yourself all kinds of perks, especially given the financial troubles of the company?

A: If it was about management decisions or processes that we have set up, then we would be more than happy to respond to and engage with the critics, at least those who back their claims with substance. Some constructive ideas cannot be implemented due to numerous reasons and sensitivities. Of course, no one is infallible and sometimes mistakes are made, but let me assure you that at all times the interests of the airline have guided the decisions.

We welcome constructive criticism but at the same time don’t have the time or the compulsion to respond to each and every ill-informed critic levelling unfounded charges at us. These critics are mostly ex-SriLankan employees while there are a few from within the airline as well. Their motives are unclear but I must say that the most vociferous is one of about 55 who applied for the post of CEO, but was not even shortlisted. I can only assume this had not gone down well and is the source of the many distorted and untruthful allegations about me and the senior management.

But since this concerns me, I will respond to clear the air and my name if nothing else. I do not draw a salary or any Board fees or receive any other payment. Anyone who knows me would tell you that I never had even an iota of interest in joining a State institution for either remuneration or glory. 

Q: And the perks, including flying off to watch cricket from the Box at Lord’s?

A: The perks that the Chairman and the Board Directors are entitled to amount to a total of six tickets per year on Business Class to any destination we fly to for self and spouse. I get a car and driver and that’s how I get from home to work and back. The truth is that after taking this job I’ve travelled far less than I used to.

As for Lord’s, I’ve seen lots of reports and comments. To me these are silly and puerile attempts to tarnish my name and more seriously that of SriLankan Airlines. The day in question did not cost anything, the box, food and drink was given free of charge as a contra for flying the Foundation of Goodness dancers to perform at the match which was broadcast live on TV and witnessed by over 10 million people. 

The invitees were a few top corporate clients, some members of our legal team, lessors and staff. Several past cricketers were guests of others down the same corridor and turned up at various times and posed for photographs. The only politician among them was our former Minister Arjuna Ranatunga, and the others at the match were not with us but I believe guests of the ICC and the MCC. I also did not take any per diems allowances or hotel costs as has been alleged.

Q: How would you respond to the allegations of very high salaries being paid to senior managers who had been offered employment only due to their connections?

A: If anyone thought that I could turn the company around all by myself or for that matter that anyone could do this by himself or herself, that person has to be delusional. What we have achieved so far is due to the commitment of the entire staff at SriLankan Airlines which has risen to the occasion and is determined to do whatever necessary to make things right.

With respect to payments, it is not something that is peculiar to SriLankan Airlines. Those who complain and accuse would do well to check what other top professionals in the country get paid. We are running an airline which needs specialised skills, and as I have said before we needed the experienced people who can deliver. Simply put, they don’t come cheap.

For that matter, other than the senior management, we have 186 others who earn over a million rupees per month while 105 have cars, all these are necessary payments to retain their service and obtain their expertise and professionalism. It’s a tough business and the kind of expertise needed at critical points of the command structure of the organisation comes at a premium. We pay them what they deserve and they, for their part, have delivered. However I must refute with a smile the wild allegations that have appeared in the press that some senior managers get over a million dollars a year and I pay myself Rs. 6.5 million a month.

Q: Pilots have expressed various reservations, including over the recent decision on the use of Business Class lounge. Can you comment?

A: The main reason for the restriction of the business class lounge is space, and not cost as it has been made out. The lounge is already crowded at peak times and Business Class passengers want their premium space, which is what they pay more for. Since we cannot make the lounge any bigger and soon may have to get used to even smaller premises with the plans to move the immigration counters upstairs, it was important that we reduced usage by non-commercial passengers.

Most airlines do not let staff even on duty travel to use the lounges, they are meant only for Premium class passengers. This is the industry best practice worldwide. We have made an exception for staff on duty and only restricted access to those and their families on holiday travel. Here I must say that the message could have been communicated better to the pilots and others, but they are well aware of the international practices on lounges which they are subjected to whilst travelling.

Q: Is it true that you have to deal with a lot of political interference?

A: SriLankan is owned by the State. State-run enterprises are not like private companies. The Prime Minister and other relevant ministers have a right to know what’s happening, what’s being done, etc. There are lots of people involved because SriLankan Airlines has been fraught with controversy. 

Naturally there are many people and many ideas. We put our heads together and try to come up with solutions. It is next to impossible to satisfy everyone. Indeed, if I tried to do that it wouldn’t take us anywhere. My job is to figure out what course of action has the best chance of yielding something positive. Sometimes those whose ideas are not accepted are unhappy. Some take it in the right spirit, some don’t. But I can’t afford to lose any sleep over such petty things. 

So, to answer your question, yes I do have to deal with politicians but I am not under any kind of political pressure outside of attending to the task given to me. I must also add that most of the unions have worked closely with the management and we have had a good relationship and have by discussion sorted out many of the contentious issues and anomalies that existed. We are fortunate to have a dedicated Minister and a Deputy who understand this business.

Q: There are reports to the effect that there’s disunity in the Board and that this is making things worse. Is there any truth in this?

A: As a Board of experienced persons, we do have different thinking. In fact if that was not the case, then there’s something seriously wrong. A healthy board of directors is one where there are divergent views, where any proposal is subject to a lot of scrutiny, where hard questions are asked and are comprehensively answered. We can argue, and agree to disagree, but once we decide, we stand as one. That’s the kind of Board we have. The unity, as it should, is about standing as one once a particular decision is made or a particular course of action is formulated and agreed upon. 

Differences in opinion are common in boards and in fact it is a natural outcome when there are people with diverse experiences and expertise. That’s a plus, not a negative. Professionals understand this, expect this and will always defend the final decision. Only people who do not understand this basic principle of boardroom operations could describe such exchanges as evidence of disunity. Without the support and the guidance of the Directors, we could not have achieved or got to where we are today. We are confident that we will be able to deliver a good and efficient airline to a prospective bidder, which is what we are primarily here for. 

Honestly it is embarrassing that I have to justify my actions at SriLankan or explain myself in an interview. The Board, senior management and many in the airline wanted me to go through this exercise to put the record straight on the many untruths and misconceptions about the airline and myself and this is the only reason why I am responding to these questions. 

Q: What are the future plans for the airline?

A: There’s very little we can do about agreements already signed and loans that need to be serviced. What we’ve tried to do is to streamline operations, eliminate wastage and do whatever else is necessary to ensure that the airline does not continue to bleed.

Sri Lanka has a lot of potential. The entire world is looking at Sri Lanka and there are many people interested in investing here. SriLankan Airlines is the first PPP, and we are putting things in place so that the search for a partner or even a buyer, as has been decided by the Government, takes place probably in the new year. I think the learning from this exercise would be of great use to the Government when it comes to the process of selecting partners for the other SOEs.

I have also discovered that one of the greatest assets SriLankan Airlines have is the staff.  We have a truly extraordinary team of highly capable individuals whose commitment to turning things around is absolute.  I am convinced that any course of action decided upon by the policy makers and implemented by the management will have an excellent chance of being successful simply because of the invaluable human resources we have with us.

Q: What are your plans, outside of SriLankan?

A: I said at the beginning that I am quite satisfied with what I’ve achieved in my life, and importantly without favours from anyone. I watch a lot of sport, especially cricket, and concerts by my favourite artists. I enjoy spending time with my friends, and family. Life is too short to make it petty or cheap. I am grateful for everything that my country has given me and I will always do my best for it, in whatever capacity.