SriLankan Airlines divestment phase one ends by December 2023
By: Staff Writer
Colombo (LNW): The government has called for bids for the divestiture of the debt-ridden national carrier SriLankan Airlines, Minister of Ports, Shipping & Aviation says.
As such, Invitations to Tenders (ITTs) have been published using local and foreign media and websites, according to Minister Nimal Siripala De Silva.
The divestiture is planned to be completed through a two-stage competitive bidding process; namely RFQ (Request for Qualification) and RFP (Request for Proposals for the Proposed Transaction).
Last month, Minister De Silva, joining Ada Derana’s “State of the Nation” program, addressed the reports alleging that the government is planning to sell off the national carrier by the end of 2024.
Denying the claims, the Aviation Minister reiterated that the government intends to retain 51% of SriLankan Airlines’ shares and divest the remaining 49%.
He had mentioned that running the national carrier as a joint venture is the solution as SriLankan is in debt. The airline’s total debt amounts to USD 1.2 billion.
Founded in 1979, SriLankan Airlines operated with a fleet of 24 Airbus A320 and A330 aircraft and has a route network of 126 destinations in 61 countries.
Divestment of Sri Lankan Airlines (SLA) and its subsidiaries has been identified as a priority due to its high fiscal risks and its phase 1 restructuring process is to be completed by end 2023, finance ministry sources divulged.
The Cabinet has approved the divestment of Government-owned shares of SLA and sell side transaction advisors (i.e., International Finance Corporation) have been appointed.
It is expected that the initial due diligence and divestment strategy (phase I) will be completed by the transaction advisors by the end of December 2023 and phase II of the engagement to execute the transaction would take a further 6 months.
Despite the challenging external and internal funding constraints, SLA has recorded a profit of Rs. 60.2 billion during the last quarter of the financial year 2022/23 and the SLA had negative net assets of Rs. 511 billion at the end of March 2023.
This was confirmed by Ports and Civil Aviation Minister Nimal Siripala de Silva while warning that the jobs of Sri Lankan Airlines employees is at risk if immediate restructuring measures are not implemented.
He disclosed that the potential loss of jobs for approximately 6,000 employees at Sri Lankan Airlines is evident if immediate restructuring measures are not implemented.
The Minister admitted that out of the fleet of 27 Airbus aircraft owned by SriLankan Airlines, only 16 are currently in operational condition.
The Minister emphasised that the Government cannot withstand the financial losses incurred by SriLankan Airlines and it would be unfair to continue using taxpayer funds in this manner.
He disclosed that several foreign investors have already expressed interest in taking over the management of the airline but didn’t name them.