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The President and his delegation then returned to Colombo in a low cost flight. Upon arrival, the government nulled the contract of Peter Hill and ordered him to leave the country within December 28. After many meetings, the decision was reached to end the partnership between two airlines. Lankaeverything.com reports:

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.

Before this event, in September 2007, Emirates Airlines President, Tim Clark, said that Emirates Airlines was planning to renew the contract for another five years which could be extended to another five and double the number of Emirates Airlines planes to thirty.

Currently, the Sri Lankan Airlines operates 100 flights per week to 11 destinations in India; the highest number of flights any foreign airlines can operate in the region. Indian people living in South-East Asia, Middle East, and Europe makes up the majority of its passengers. Sri Lankan government decided to privatize the airlines in 1998. The government entered into ten year contract with Emirates Airlines in April that year. Sri Lankan government owns 51% and Emirates Airlines 43.6%, which is worth $150 million, of the airlines. Now, Emirates has decided to sell its share in public. In January this year, Sri Lankan government talked with two private Indian Airlines, Jet and Kingfisher but none of them seemed to be interested.   

Kingfisher's executive V-P Hitesh Patel confirmed that the airline has approached them and some other Indian carriers. "We were offered that stake and SriLankan asked us if we were interested. We told them that as of now our hands are full with the Deccan merger and we are not interested at this point of time."

Jet Airways, however, maintained a "no comments" stand. Indian carriers are learnt to be offered a 43.6% stake. The Sri Lankan government holds a 51% stake in the airline, while employees have the rest.

According to the latest news, Sri Lankan government has decided to take full control of the airlines.

Now, the big question that lies ahead is-will the government be able to properly manage the airlines and keep it a profitable organization? This small country has been suffering from bloody civil wars for many years. In 2004, the Tsunami caused huge damage to the country. Amidst all these, the Emirates Airlines run the organization very efficiently. Will the Sri Lankan government be able to run it with equally efficiency?    

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