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Sri Lankan Airlines, the national carrier of Sri Lanka, made a record profit of 5.6 billion Sri Lankan rupees in 2004, becoming the most profitable public sector organisation 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, labour problems and delayed flights. Sri Lankan Airlines was in great need of new investments to solve its problems.The Sri Lankan government decided to invite Dubai-based Emirates Airlines to acquire a 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 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. A structured assignment ''306-176-4'' is available to accompany this case.