Sri Lankan politics was volatile - Sir Tim Clark

views 577 2018-05-17 05:10:00 news

In an interview with Business Insider, Emirates Airline president Sir Tim Clark has revealed the lessons learnt from buying into Sri Lanka’s national airline – its only foray into equity ownership – and why they refrain from making anymore equity investments in other airlines. 

According to Clark, Emirates has been approached by “hundreds” to get involved in their airlines. Whether that be by their owners, the governments that own them, or their parent companies. 

But Clark has turned them all down apart from one. And the lessons learned from Emirates’ only foray into equity ownership would go on to inform its decision making for years to come.  

In 1998, Emirates spent $70 million to acquire 43.6% of Sri Lankan Airlines,  a money-losing government-owned carrier. Clark was tasked with transforming the airline’s business and products.

To do so, Emirates stipulated that it must have total control of the airline in spite of local laws limited foreign equity ownership. Local politics proved to be difficult to navigate and hampered the turnaround. 

“I was down there between six and eight times a year,” he told us. “Sri Lankan politics was volatile. There was a war going on and we had a lot of problems to deal with.”

By the time the partnership ended in 2008, Emirates had managed to turn Sri Lankan around through great difficulty.

The experience left a lasting impression on Emirates and its president. In short, he doesn’t think it’s worth it. 

“What it taught us, in the end, was that the management time being soaked up in the M&A activity and the subsequent on-going management of these airlines to protect your investment was disproportionate to the return,” Clark said.

Sir Tim went on to explain that Emirates has grown organically to a scale where equity acquisition would no longer make strategic sense for the airline.


(under the courtesy of adaderana.lk news web)

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