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21 May 2024

Emirates exits Sri Lanka deal

By Shweta Jain



Emirates is to cancel a 10-year contract with SriLankan Airlines, and is considering selling its 43.6% stake in the company for $150m, the Dubai carrier said today.

Emirates will continue to manage the airline’s operations until the end of the contract on March 31, it said in a statement.

“Emirates has notified the Government of Sri Lanka that it will not be renewing the Shareholder's Agreement which expires on 31st March 2008,” said Tim Clark - pictured above - who is both President of Emirates Airline and Managing Director of Sri Lankan Airlines.

“Accordingly, with effect from 1st April 2008, management control of Sri Lankan Airlines will pass to the Government of Sri Lanka.”

The airline also said it is interested in selling all or part of its 43.6 per cent stake in SriLankan.

"It's a good buy.  We would be seeking about $150 million if we were to sell all of our stake," Clark told the Reuters news agency.

A source close to the deal told Emirates Business that it is the exit of SriLankan Airlines’ chief executive, Peter Hill, last month, that acted as a deal-breaker between Emirates and SriLankan Airlines.

“I did not see the deal going through in the first place as Emirates was a little tired of things, especially after this episode of Peter Hill. They have tried to do whatever is best for Sri Lanka and SriLankan Airlines. But scepticism had creeped in of late, in a negative way,” said the source.

Hill, who was appointed SriLankan Airlines’ CEO by Emirates, lost his work permit last month after he refused to accommodate Sri Lanka’s President, Mahinda Rajapaksa and his entourage of 35 on a London-Colombo flight. He then left the country on December 27.