Dubai: Emirates will end a 10-year partnership with Colombo to manage SriLankan Airlines and is reportedly recruiting staff from the island's flag carrier in what appears to be the climax to their troubled relations.
The Dubai airline said on Sunday it will pass SriLankan's management control to the Colombo government, which owns 51 per cent of the carrier, in April.
Emirates, which has a 43.6 per cent stake in SriLankan and fully manages the company, said it had no immediate plans to sell its share.
"Emirates has notified the government of Sri Lanka that it will not be renewing the shareholder's agreement which expires on March 31," Tim Clark, president of Emirates and managing director of SriLankan Airlines, said in a statement.
"Emirates will continue to manage the company until March 31. Emirates will also retain its 43.6 per cent equity in the company for the time being, and continue to have a board presence," he added.
Privatised in 1997, SriLankan has seen improvement in its services and management under the Emirates deal.
Clark was in Colombo on Thursday for what the local media described as "make-or-break talks" on the renewal of the 1998 management contract.
Reuters on Sunday quoted Clark as saying that Colombo "was seeking greater control over the day-to-day business of the airline, which was not acceptable to us."
Clark described the termination of the deal as "an amicable parting."
The Sri Lankan government last month cancelled the work permit of SriLankan's British chief executive officer Peter Hill, an Emirates man, in a row over seats for President Mahinda Rajapakse and his entourage on a London-Colombo flight.
Emirates stood by Hill, saying he will continue to head SriLankan until the management contract expires. Hill had expressed dissatisfaction with the slow pace of negotiations.
The breakup is unlikely to be smooth as the two airlines have close links, including a code-sharing arrangement.
Emirates had maintained a tacit policy of not encouraging SriLankan staff to join it so as not harm its business interests, reports in the Sri Lankan media suggest.
That may have changed now. Emirates has decided to lift its self-imposed recruitment ban on SriLankan staff following the crisis with the government, the Nation newspaper reported on its website.
Fact file: Key dates
1997: The Sri Lanka government privatises national flag carrier.
1998: Emirates takes over management for 10 years.
Contract expiry: March 31, 2008
December 2007: Colombo revokes CEO Peter Hill's work permit.
Shareholding: Sri Lanka government owns 51 per cent and Emirates 43.6 per cent.
Value of Emirates stake: Estimated at $150 million.
