SriLankan Airlines: A Tale Of State Abuse & Mismanagement
By Rajeewa Jayaweera –April 10, 2016
Rajeewa Jayaweera
It is now convenient to blame the Rajapaksa administration for all the ills and losses of SriLankan Airlines. There is no doubt, the former administration plundered the airline for 10 years and did immeasurable damage through their “unqualified political lackeys”, as described by Minister Kabir Hashim. However, that is not the sum total of it. Every administration, commencing 1989 must take its fair share of responsibility for the present situation of the national carrier.
Key to this tragedy is the active participation of the state in managing the affairs of the airline through successive Boards of Directors, appointed not based on relevant professional capabilities and experience in corporate governance but on loyalty to political parties and personal friendships with party leaders.
In fairness, President JRJ having entrusted the airline to Capt. Rakitha Wickramnayake and a Board comprising of several Public Servants and two Industry Captains, never interfered during first six years of the airline’s operations. A Presidential Commission appointed in 1986 to inquire into affairs of Air Lanka found many irregularities and financial mismanagement. It faulted the board members of servitude to the first Chairman/MD, instances of conflict of interest and negligence. It was a case of breach of trust placed on them by the Head of State.
The second Board headed by a Civil Servant with industry captains of the likes of DS Jayasundera (Hayleys) and MTL Fernando (Ernst & Young) made a sterling contribution and were responsible for developing and implementing strategies which resulted in the airline discontinuing Treasury handouts. Sadly, by then, the Board had been dissolved due to a change of Head of State.
The third Board was appointed by President Premadasa. The Chairman/MD of this Board lasted less than three months and was succeeded by a senior SLAS member with Secretary to Treasury, a lawyer, a Businessman friend of the President and another young Businessman (who later became the President’s son-in-law) as board members. President Premadasa and the all-powerful Secretary to Treasury were the only persons issuing instructions to Chairman/MD. Two directors from state banks were appointed much later. During the tenure of this Board which ended abruptly with the assassination of President Premadasa, the airline financed their own operations without Treasury handouts except in the case when an order was placed for 2 new Airbus A320 and 5 new Airbus 340 aircraft (subsequently reduced to 3). During the tenure of this board, they voted to grant two sets of free tickets annually for life, to retiring Board members. President Premadasa upon hearing it ordered the Board to rescind the board decision. Interference in recruitment and appointments, especially of Pilots, Cabin Crew and Overseas Managers commenced during this period.
