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Colossal SriLankan Airlines losses, Airbus deal, a financial crime: Minister

Mar 24, 2016 18:57 PM GMT+0530 | 15 Comment(s)

ECONOMYNEXT - Colossal losses that state-run SriLankan Airlines was made to suffer since ex-President Mahinda Rajapaksa chased away Emirates Airlines, and a questionable aircraft deal, is a national financial crime, Deputy Minister Eran Wickramaratne said.

SriLankan Airlines, which made profit of 4.4 billion rupees in 2008, the year in which the management agreement with Emirates Airlines ended, has lost 107 billion rupees since, then.

The Rajapaksa administration had cancelled the visa of then Chief Executive Peter Hill because he did not bump enough paying passengers to accommodate a large entourage of the President Mahinda Rajapaksa in a single aircraft, he said.

"The CEO had said 'We should not offload all these passengers since they are citizens and they are paying passengers where there is a contract'," Wickramaratne told parliament.

"The next day his visa was cancelled in 2007."

Emirates exited the airline after 2008 sold their 40 percent shares to the government.

National Crime

"From then on it became a loss-making airline. It made colossal losses. Its losses are bigger than the spending on health or education."

"This is a national crime. We may get a benefit when we travel on SriLankan but every citizen pays. When they buy even a small item from a shop that tax is used to cover the cost of these flights.

"Is this fair? That is what I am asking."

In 1998, the then administration of Chandrika Kumaratunga had decided to sell 40 percent of the equity of SriLankan and give management to Emirates after it suffered years of losses.

"This was a good decision. I must say this even if it was done by a different administration."

Wickramaratne said an idea was spread that the companies should be state-owned and that they should be kept going at whatever cost and people were shown beautiful aircraft with the national flag flying.

"But it actual fact there are more debts than assets behind those aircraft," he said.

Hole in balance sheet

By 2015 accumulated losses of 128 billion rupees, debt of 76 billion rupees (542 million dollars) and a hole in its balance sheet of 74 billion rupees.

The hole in the balance sheet would have been bigger if not for capital injections by the Treasury from taxes collected from the people.

"Airlines are a competitive business, it is not a monopoly like Ceylon Electricity Board," Wickramaratne said.

"When people travel abroad, it can be our sister or our mother they have to count the rupees. If some other airlines offers them a better price, they will take it. That is the truth."

Ultimately losses have to borne by people who pay taxes when they buy everyday goods, he said.

Its staff which was 5,113 in 2008, had been increased to 6,987 by 2015 increasing operating costs.

"We (parliamentarians) are asked to give jobs. I am also a parliamentarian. But we have to think of the country before ourselves," Wickramaratne said.

"What happened here? The staff went up by 30 percent. There are about 300 workers to every aircraft. These aircraft do not even have that many seats. Many have only about 140 seats."

Financial Crime

Sri Lankan Airlines had been given 100 million dollars each year to cover losses by the Treasury.

SriLankan's management had then decided to buy A330 and A350 aircraft in a reckless manner, he charged.

The Airbus A350-900s aircraft were made to travel 17 hours at a stretch, when the longest direct flight was about 11 hours.

The final board decision to buy the aircraft had been made at the residence of the Speaker (who was President Rajapaksa's brother) in the absence of three directors.

The Chairman of SriLankan was President Rajapaksa's brother-in-law.

"This is not connected to the Speaker. I am not saying the Speaker was connected to this matter, but the meeting should not have been held there," Wickramaratne said.

"There is a suspicion why the board meeting was held at place like this. Who else was there?

He said according to documents 780 million dollars in government support was needed in the three years after acquisition.  An 80 million dollar deposit had been paid.

"Aviation experts have told us that the lease contract terms are 25 percent more expensive than normal and it needs to be looked into.

"The present value of the lease liability over the next 12 years is 1.5 billion US dollars.

"This is a financial crime. We have to investigate this. (Colombo/Mar24/2016 - Update III)

 


 

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15 Comments

  1. R S S Perera March 29, 02:32 AM

    Why has Mihin not been liquidated yet ? Who is the MR catcher that is preventing this nobrainer solution ?

  2. Patriot March 26, 10:06 AM

    Well, what has happened has happened. It is now time to take corrective action to save the country.First there should be a dedicated Minister appointed to bring about yahapalana, Who will bring about economies, efficiencies and effectiveness into the day to day administration. The minister will monitor the progress he has made and report from time to the Prime minister and or Parliament.Another suggestion start referring to public money as Taxpayers money at all levels of government. Thereby all parliamentarians and government officials are constantly reminded delays and wastage is taxpayers money including his own taxes paid. After all every citizen is paying some form of tax. eg. sales tax import duties, income tax etc.

  3. BKVWHK March 25, 11:44 AM

    So please sell the airline to another international carrier and bring it up to date so that we can become an aviation hub. Have vision like MR did whatever else he did. The A350 is necessary if we are going to become an aviation hub with long haul connections to Australia. There are big markets between Australia and New Zealand and Europe, and also between the US and South Asia, that need to be tapped. If we don't have modern aircraft with luxury seats, the high end travellers will not fly our airline.

  4. Paba Sira March 25, 04:37 AM

    If Yapalanaya cant run the country, give it back to the thieves who can run like a fine Swiss watch. All excuses and excuses, nothing happens except talk and more talks. When MR took over half the country and it was bankrupt, dysfunctional and down on its knees, back against the wall.

  5. The Sad truth March 25, 04:35 AM

    These guys have no guts to go deeper into the cancer and root out the corruption as they are afraid of the consequences that would befall them if the crooks came back into power. They can only make allegations but are shivering in their boots when it comes to rooting out the culprits. So much for yahapalanaya. You need to set a thief to catch a thief.

  6. jaffnaboy March 25, 04:02 AM

    My dear Deiyyo Sakki, Actually Dickie is correct as in we know the ailment but what is the treatment/cure is what we are all waiting for. Just putting the blame/or locking up the former government is not the cure.And to cure a big illness takes time we know that too but where is the prescribed medication or plan of action to turn SLA around...

  7. Ambrose March 25, 03:44 AM

    Re CITIZEN's comment extract follow up, get the culprits. Dear Citizen, you seems to be too naive....Please understand that time and time again Sri Lanka is ruled by corrupt demons that are all third grade bandits, murders etc. So the story is they just talk about all the corruptions by the previous regime, talk racial politics and what not to distract the poor uneducated masses so that the people will never understand or come to know how they are further robbed and hijacked by the present bandits.

  8. Lanka Watch March 25, 02:13 AM

    Why is the minister crying overspilt milk. You were in power forwell over one year and why you didnot down size the airline or handit over to another airline to run it for us, like what Emirates did for us. Pride Lethargic attitude of the Govt. is the reason for the heavy loss incurred in UL on a daily basis. Why is this 'dollarguzzler' airline allowed to operate. Prestige, is it ? or fear of losingthe privilege of free travel on the national carrier ?

  9. Crana March 25, 02:34 AM

    If a crime was committed, why not catch the culprits and put them in jail? Everyday, we hear about this crime and that crime. But nothing happens. Is the government using this talk to fool the people?

  10. Deiyyo Sakki March 24, 11:24 AM

    It's crazy to see so many people like the commenter Dickie Bird exist in SL. Yahapalanaya cannot just turn around Sri Lankan the business is a bad idea. So SL has to be pragmatic about national priorities and SL Airlines is NOT I'm just an observer and not a Yahapalanaya cheerleader.

  11. rag March 24, 10:27 AM

    for petes sake what happened to all those commissions weliamuna report they are all rougues

  12. wigna March 24, 10:20 AM

    This is a very serious crime MR and his cohorts should be locked up in a dungeon for the rest of their lives if found guilty.

  13. Citizen March 24, 09:11 AM

    We voted for Eran, Harsha and few others to act against corruption and looting of public funds. This is a good exposure but what's the point. Are theseMP's back benchers or Independents. Why can't they follow up, get the culprits in custody and proceed with legal action to put them out for good. This has become all show and no action. Act now before its too late and be recognised as saviours of Sri Lanka economy.

  14. dickie bird March 24, 09:21 AM

    Oh Minister This is all what you can do. To make out a case to sell Sri Lankan by showing losses.You have just proved YOu nor the New board are capable of turning things round at the Sri Lankan.So you Yahapalanaya too have joined the bunch of weiners. All you can do is to lay blame unable think out of the box to turn it around.Eran, its time you go home learn to scrape coconuts.Its easy to criticise point the finger. But what have you yahapalanaya done so far to turn it around? NOTHING.You are another talk shop.

  15. Chandi March 24, 07:35 AM

    Well done sir.I am wondering why other ministers etc are not revealing the real facts about the mismanagement and corruption that was rampant during Rajapakse's regime. These are real crime that every citizen needs to know. These criminals should not be allowed to hide behind the fake patriotism.

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