Emirates ready to divest stake in Sri Lankan Airlines
07 January 2008
Emirates Airline is prepared to shed its stake in state-controlled Sri Lankan Airlines, uncomfortable at the government's attempt to gain greater control over the carrier's day-to-day business. Reports suggest that Emirates has already notified the government of Sri Lanka that it will not be renewing the shareholder's agreement, which expires on March 31.
If so, then with effect from April 1, management control of Sri Lankan Airlines will pass to the government of Sri Lanka.
According to reports, Emirates president Tim Clark has said that the Sri Lanka government was seeking greater control over the day-to-day business of the airline, which was not acceptable to Emirates. Clark has also been reported as saying that Sri Lankan investors might be interested in picking up the Emirates stake.
Clark said that Emirates, which owns 43.6 per cent of Sri Lankan, and had been executing a 10-year management contract with the carrier, would value its stake in the carrier at about $150 million. Emirates had paid $70 million for its stake in Sri Lankan, so far its only investment in another carrier.
Matters have come to a head with the Sri Lankan government last month cancelling the work permit of Sri Lankan chief executive officer, Peter Hill, who had been seconded from Emirates, after the carrier refused seats to president Mahinda Rajapaksa and 35 officials who were visiting the United Kingdom.
Earlier in September, Emirates had been expecting that its management contract would be renewed for at least another five years.