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Saturday, 30 December 2017 00:00 - - {{hitsCtrl.values.hits}}
Point of view
By Dhammika Rodrigo
When the news broke out of the decision taken by members of the Board of Directors of National Carrier SriLankan Airlines to tender their resignations to clear the way for the restructuring of the organisation, there was so much of happiness and joy. Almost every FB account applauded the decision. The expectation of new appointments being made early next year was positive news.
The news item said, a letter communicating the offers of six of the seven members of the Board to resign along with the minutes of the Board meeting where the resolution was reached has already been handed over to Prime Minister Ranil Wickremesinghe’s office. However, the Minister is yet to be informed of the decision, Hashim told the Daily FT. From all accounts this seems to be another eyewash to fool the people.
Lack of experience
Though the airline business is highly susceptible to turbulent oil prices, which management has little or no control over, airlines generally have in-house competence to manage it. Under the previous management, the fuel prices were at record high levels but under this management the fuel prices were at their lowest levels.
The last two years offered the best opportunity for the airline to restructure and show operating profit and reaffirm that the UNP Government is better at managing business. The UNP has got good professionals in their team. People who have delivered at the highest levels. Unfortunately, they handpicked a controversial UNP team to lead the airline and a former UNP Chairman’s brother as the CEO. The Board has certainly shown the public that they seem to have no clue as to how to run the airline.
Evidence of bad management
The current UNP team has performed far worse when compared with the previous Board led by Nishantha Wickremasinghe. For example excluding the non-management related fuel costs.
New management:
Previous management:
Looking at the numbers there is a clear drop in performance over the previous years. Every percentage drop in efficiency results in airline costs going up by over 100 million.
According to Sanjana Fernando, an airline expert, in 2017, the fuel costs were only around 25% of revenue, almost half of that under the previous management. In fact, hypothetically, if the previous management had the benefit of the same low fuel cost margins, they would have surely succeeded in showing a net profit as shown below (even after debt servicing):
New management:
According to Fernando, the threat by President Sirisena to sack the UNP management team and the Board a few month back was outmanoeuvred by the PM, who appointed two committees, one with mostly-corrupt Cabinet Ministers (Ministerial Committee) and the other with State employees loyal to the PM (Official Committee).
Furthermore he says: “At the undiplomatic request of Charitha Ratwatte, the CEO, his brother in question was also later added into the Official Committee. These two great minds (Ratwattes) later decided to appoint a UK aviation consultant with archaic views at a cost of over a million dollars, only to receive a preliminary report last week with basic and obvious recommendations.” It is no secret that Charitha Ratwatte was responsible singlehandedly for sending the UNP Government home in 2004. He is still behind the Prime Minister’s wall attempting to control the affairs of the Government with catastrophic consequences for the Government.
It is not the Prime Minister who is taking these unpopular decisions. It is people like Ratwatte hiding in his office who are making the Prime Minister unpopular by promoting family bandyism. (http://www.ft.lk/columns/The-%E2%80%9Clost-two-years%E2%80%9D-of-SriLankan-Airlines/4-645916)
Sorry state of affairs
While this is not a full analysis, it is an indicative of the mismanagement, incompetence and favouritism that has resulted in a missed opportunity for the people of Sri Lanka. The Government audit should study the perks of the current Board and how many free tickets they have used in the last 24 months. Even after the bashing from the Government at Cabinet the Board has shamelessly continued. This Board will never go, they have nowhere to go. Most of them have no jobs and are retirees.
Solution
The Government without playing the fool with the public must accept their resignations. Then get rid of the CEO, who has destroyed the airline. Harry Jayawardene must be appointed as Chairman. The Board should comprise a top accountant, marketing, human resource, a supply chain and a digital expert and an airline operations expert.
If the politicians are not willing to listen, then the public must stand up be noticed. Just like the bond scandal, the only way to find a genuine solution to this problem is for the President to appoint a commission to investigate the plundering from both groups.
(The writer is a management expert.)
