Summary

  • Sri Lankan government said that since no suitable bidders attempted to buy a stake in SriLankan Airlines, it will restructure the airline instead.
  • The government had attempted to make the carrier more attractive by absorbing some of its debt.
  • SriLankan Airlines has had financial issues for a long time.

The Sri Lankan government has decided against the sale of a minority stake in SriLankan Airlines, arguing that while there was interest from foreign entities, the government deemed that none of the bids were suitable. As a result, the government will restructure the carrier.

No suitable bids

Nimal Siripala de Silva, the Sri Lankan Minister of Ports, Shipping, and Aviation, confirmed the news on July 4, saying that the government will restructure the airline instead of selling it to a national or foreign entity. De Silva emphasized that Sri Lankan regulations would prevent the sale of a stake of more than 49% in SriLankan Airlines to a foreign individual or investor.

SriLankan Airlines Airbus A320 departing SEZ shutterstock_1607456812

Photo: Markus Mainka | Shutterstock

De Silva added that there was minimal interest in purchasing a potential stake in the airline, with only six individuals expressing interest in the opportunity. The Minister added that even if the government were to request proposals from locally registered individuals or private companies, they would have to demonstrate their capabilities to run the airline.

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Absorbing debt

The government has attempted to make the airline more attractive to third-party investors, including the Sri Lankan government, by absorbing SriLankan Airlines’ debt of over $500 million. According to reports from local media, including EconomyNext and Daily FT, the Sri Lankan Ministry of Finance, Economic Stabilization, and National Policies would absorb $512 million of its debt, while de Silva added that an additional $70 million of revenue, which would come from the airline’s ground handling and catering divisions, would further boost the carrier’s liquidity.

shutterstock_1604771542

Photo: Markus Mainka | Shutterstock

SriLankan Airlines’ short-term and long-term liabilities were LKR234.5 billion ($769.4 million) and LKR154 billion ($505.3 million), respectively, the report by Daily FT added. De Silva had hoped that the government would be able to restructure the airline within six months.

“Now we are showing the bride, who is looking more attractive. We just have to see who the groom will be. We will include the airline, ground-handling and catering under this program as it all comes under one single entity.”

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SriLankan Airlines fleet

According to ch-aviation data, SriLankan Airlines has a fleet of 22 aircraft, split between 17 active and five inactive aircraft. The airline has seven Airbus A320ceo, two A320neo, four A321neo, two A330-200, and seven A330-300 aircraft in its fleet. However, barring a single Airbus A320ceo, registered as 4R-ABS, delivery in December 2023, the airline has not received a single new aircraft since 2018. Royal Brunei Airlines previously operated the A320ceo.

SriLankan Airlines Airbus A330-200

Photo: Soos Jozsef | Shutterstock

Ch-aviation has still indicated that the airline has four A350-900 aircraft in its backlog, which was affirmed by Airbus’ latest orders & deliveries filings for May. However, the delivery of the quarter has dragged on as SriLankan Airlines has continued to struggle with its debt, with the carrier’s former chief executive officer (CEO), Suren Ratwatte, telling Reuters as far back as 2017 that Airbus and the airline could arrange a deal to change the four A350-900s to a different aircraft type.

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