Dubai, Jan 7: Dubai-owned Emirates Airlines today said it was ending the management control agreement it had with the Sri Lankan Airlines, though it will continue to be on its Board of Directors for the time being.
The termination of the partnership comes at the end of a bitter row during which Colombo cancelled the work permit of Peter Hill, the Emirates-appointed chief executive of Sri Lankan Airlines, after the airlines denied seats in a flight from London to an entourage led by Sri Lankan President Mahinda Rajapakse.
In a statement to the press Emirates Airline President Tim Clark and Managing Director Sri Lankan Airlines said it had notified Sri Lankan Airlines about the decision but did not elaborate on the reasons behind the move.
Emirates has notified the Government of Sri Lanka that it will not be renewing the Shareholder's Agreement which expires on 31st March 2008 and accordingly, with effect from 1st April 2008, management control of Sri Lankan Airlines will pass to the Government of Sri Lanka.
Emirates will continue to manage the Company until 31st March 2008. Emirates will also retain its 43.6 per cent equity in the Company for the time being, and continue to have a Board presence, Emirates said in the statement.
Emirates, the biggest Arab carrier owns 43.5 per cent of Sri Lankan Airlines but the Sri Lankan government is the controlling shareholder with 51 per cent.
India-bound passengers mostly from south-east Asia, West Asia and Europe account for an estimated 40 per cent of Sri Lankan Airlines' revenue.
Thanks to Sri Lanka's close economic relationship with India, Sri Lankan Airlines has rights to operate more services to its giant neighbour than any other foreign airline, with 100 flights a week to 11 destinations in India.