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Govt-Emirates fresh meeting on UL in January
SriLankan Airlines wants a new management contract to be signed
soon with Dubai-owned Emirates, chief executive Peter Hill said
Tuesday, forecasting a “tough” year for the island’s
carrier. The Colombo government is holding another meeting on January
8 with Emirates to discuss the renewal of the 10-year management
contract of SriLankan Airlines that runs out next March, an airline
official said.
“The negotiations between the government and Emirates have
been going on for 18 months. I would have liked to have seen them
resolved by now,” Hill told reporters in New Delhi. The Sri
Lankan national carrier, in which Emirates holds a 43.6 percent
stake, needs a decision to push ahead with its business plans that
include expanding its fleet to 30 aircraft by 2013 from the current
14, he said.
Hill
was in the Indian capital to announce that SriLankan Airlines had
become the first foreign carrier to operate 100 flights a week to
India and hoped to boost that number to 150 in five years.
SriLankan Airlines entered into the strategic partnership with Emirates
in 1998 in which the Colombo government retained a majority stake,
but gave full power to Emirates to run the airline.
Media reports say the Sri Lankan government wants a bigger role
in managing the carrier and that Emirates opposes such a move. The
reports have also said that the government has complained the contract
is “heavily tilted” financially in favour of Emirates,
which has declared it is keen to have a new deal.
Hill declined to comment on the reports.
He said he expected the airline’s profits this year would be
better than in 2006-07. But he added it would still “be a tough
year” for the airline with the escalation in Sri Lanka’s
ethnic separatist conflict deterring foreign tourists and fuel costs
nearly one-third higher than initially expected.
As new tourist destinations open up, any country that suffers civil
unrest is bound “not to be on the top of everybody’s popularity
list,” said Hill.
SriLankan Airlines Group posted a post-tax profit of 862.18 million
Sri Lankan rupees (7.8 million dollars) for the financial year to
March 31, 2007, a drop of 50 percent from the previous year.
Hill said Emirates and Colombo were discussing a five-year contract
as another 10-year contract would be too long in a fast-evolving
aviation market.
Aviation experts say the two sides’ codesharing and other links
meant that dissolving the partnership would cause big headaches
for both airlines.
“We (the airline management) don’t get involved in the
negotiations,” Hill said, but added that “all our plans
are based on a new deal being agreed.”
The airline’s fleet expansion was likely to involve a “50-50”
mix of narrow-bodied and wide-bodied aircraft, he said.
The decade-long tie-up with Emirates had vastly improved the catering,
punctuality and overall reputation of the Sri Lankan airline, Hill
said.
“We have a new brand, a new level of service. We are now taken
very seriously by all our competitors.”
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