Tuesday, October 10, 2023
The head of Sri Lanka’s State-Owned Enterprises Restructuring Unit has said that the privatisation of loss-making carrier SriLankan Airlines (UL, Colombo International) should be finalised by June 30, 2024.
Suresh Shah also told Colombo-based media last week that the airline’s transaction advisor, the International Finance Corporation (IFC), should come up with its proposal by the end of this year.
Sri Lankan Airlines is one of 85 state-run enterprises Shah’s agency has recommended the government wholly or partially privatise.
More than one hundred other companies will undergo restructuring but remain in government hands. ch-aviation recently reported that the government was in talks with several potential investors, including Emirates, the Adani Group, and Tata Sons.
Emirates previously owned a 43.63% stake in SriLankan Airlines and managed the carrier’s day-to-day operations but divested in 2010. Since then, on-again-off-again efforts to find a new investor have failed.
In June, SriLankan CEO Richard Nuttall told ch-aviation that the immediate priority was to restructure the airline’s balance sheet given the high cost of servicing its debt, and then move to sell the carrier.
In the 12 months to March 31, 2023, SriLankan posted a loss of LKR75.03 billion Sri Lankan rupees (USD232 million) on revenues of LKR365.17 billion (USD1.13 billion). Its profit and loss statement reveals it spent LKR49.1 billion (USD152.2 million) on financing costs.
Sri Lanka’s depreciating rupee cost the carrier another LKR26.7 billion (USD82.9 million).
Ahead of any privatisation, SriLankan Airlines continues to experience reliability issues, with local media reports criticising it for its high cancellation rate, ostensibly due to the large number of grounded aircraft.
According to ch-aviation fleets advanced data, four of its 24 aircraft are out of service, including one A320-200N, two A321-200Ns, and one A330-200.
Nuttall told ch-aviation that the A330-200, 4R-ALB (msn 306), one of four the carrier operates, is grounded pending its return to its lessor after the lease period ended.
Ports and Aviation Minister Nimal Siripala de Silva reportedly told Sri Lanka’s parliament last week that the airline needed more aircraft and that five attempts to lease an additional A330 had come to nought. “No one wants to give them to us,” he said.
“We managed to secure only five A320 aircraft. I have now informed the airline that they must always keep a spare aircraft to go and pick up passengers if the scheduled aircraft is unavailable.” Nuttall says there have been two requests for proposals issued for A330s, and while nothing to date has been secured talks with lessors continue.
Tags: passengers, Srilankan airlines
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