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July 19, 2024
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On Wednesday, Daily Mirror, a leading English daily in Sri Lanka, quoted the Minister of Shipping and Aviation Nimal Siripala de Silva as saying that there were no “suitable suitors” for the national carrier SriLankan.

The Minister did not specify what he meant by “no suitable suitors” for SriLankan. The Minister added that only six individuals expressed interest, none of whom were deemed suitable. “Even if we were to extend this opportunity to a Sri Lankan entrepreneur, their capabilities would need to be demonstrated,” the newspaper quotes de Silva as saying. 

The Daily Mirror report adds that the Minister said the government’s approach involves restructuring the airline rather than selling it outright.

Considering the difficulty of attracting investors with the debt burden of SriLankan Airlines, the government decided to transfer $ 310 million worth of local loans guaranteed by the General Treasury to the government. To safeguard the national carrier, the government offered assistance by issuing a Sri Lankan Rs. 5 billion equity contribution to support its ongoing cash flow problems in the first four months of 2024,” the newspaper report states. 

The then-new Prime Minister, Ranil Wickremesinghe, announced the decision to privatize the airline in a televised address to the nation in May 2022. The proposal to sell the airline was part of efforts to stabilize the island nation’s finances amid the ongoing economic crisis.

It should not be that this loss has to be borne by the poorest of the poor who have not set foot in an aircraft,” Wickremesinghe said. He added that the national carrier lost Sri Lankan Rs 45 billion ($124 million) in the year ending March 2021.

But now, there seems to be a 360-degree change in the Sri Lankan government’s thinking.

The decision to financially support the airline comes despite a Sri Lankan Member of Parliament pointing out on May 8 that at the end of the 2023 financial year, the airline’s losses amounted to Rs 609 billion. He had said that every family in this country has been placed in a position where they have to pay Sri Lankan Rs 107,000.

Interestingly, the news of the Sri Lankan government comes on the day that it was able to restructure $125 billion of outstanding bonds.

The Sri Lankan newspaper reported that the airline recorded a revenue of Rs.333.6 billion in the fiscal year 2023/24, a decrease of 8.6 percent, compared to Rs.365.2 billion in 2022/23.  It recorded a profit before tax of Rs.7.3 billion in 2023/24, compared to a Rs.73.3 billion loss recorded in 2022/23, mainly due to converting the exchange loss of Rs.25.6 billion in 2022/23 to an exchange gain of Rs.0.5 billion in 2023/24.

The airline was rebranded as SriLankan after the Dubai-based Emirates acquired a partial stake of about 43 percent in 1998 in the airline. However,  the Sri Lankan government acquired the entire stake in had sold to Emirates in 2008.

The airline’s website shows its fleet consists of 24 aircraft, including 12 Airbus A330s used for long-haul flights and 12 Airbus 320/321s used for medium-haul destinations.

author avatar
Ashwini Phadnis
Former Senior Deputy Editor at Business Line (aka The Hindu Business Line)

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