Restructuring / Turnaround Strategies Case Study

Sri Lankan Airlines: The Turnaround Story and After

Abstract:

Sri Lankan Airlines, the national carrier of Sri Lanka, made a record profit of Sri Lankan Rupees 5.6 billion in 2004 becoming the most profitable public sector organization during the year. However, the airline was in deep trouble since inception. Inspite of being known for its courteous customer service and fairly good in-flight facilities, the company faced many problems such as old fleet, high fuel costs, labor problems and delayed flights. Sri Lankan Airlines was in great need of new investments to solve its problems.

Sri Lankan government decided to invite Dubai based Emirates Airlines to acquire 30% stake in 1999. The stake was increased to 43% in 2001. Emirates Airline was cash rich to make investments and used its expertise to bring the turnaround of the Sri Lankan Airlines. The case discusses the challenges faced by Sri Lankan airlines and the strategies adopted by Emirates management to make the airlines profitable. The ongoing and future problems that might impact the airline’s profitability are also discussed.

Pedagogical Objectives:

• To discuss how Sri Lankan Airlines made profits amidst lot of challenges
• To discuss ongoing future problems that may affect airline’s profitability.

Keywords : Sri Lankan Airlines; Turnaround strategies; Emirates Airlines; Asian Airline industry; Profitability; Business Strategies; Restructuring / Turnaround Strategies Case Study; Operational strategies; HR Strategies Rebel attacks on Sri Lanka; Tsunami impact on airline industry; Peter Hill; Low Cost Carriers; Sri Lankan political environment; Tourism Industry