EK exits Management Contract at Sri Lankan

Wow what 4 months can change....

In September EK said it wanted to extend the Sri Lankan management contract for another 5 years and also up its stake in the airline.

However a spat ensued in November when the airline's ops people refused to bump revenue passengers for all President Mahinda Rajapakse's entourage. The President responded by suspending the work permit of the UK National (Peter Hill) who was the airline's CEO appointed by Emirates.

Now the other show drops and EK is first exiting the management contract and has also put its 44% share up for sale. This is EK's only investment in a foreign airline ever.

Given that Tourism represents the only major form of foreign direct income and the airline is vital to the national interest it seems somewhat short-sighted of the country's rulers to have acted in this manner.

Under EK's management the airline has made significant gains and retained a stable operating environment despite loosing half the fleet to a Tamil Tigers rebel air attack in 2001. The constant threat of hostile operations must have been a big drain on the management team. With the situation now worsening again EK must be thinking themselves lucky.

EK's contract will end in March 31st 2008