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Wednesday Nov 06, 2024
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Ports, Shipping and Aviation Minister Nimal Siripala De Silva
By Darshana Abayasingha
The Treasury will absorb $ 512 million of debt owed by SriLankan Airlines, in a bid to make the national carrier more attractive to prospective investors.
Ports, Shipping and Aviation Minister Nimal Siripala De Silva told journalists yesterday the Government hopes to add a further $ 70 million over the next six months through revenue generated from ground-handling and catering, and the overall debt burden of SriLankan Airlines will come down to about $ 500 million. National carrier’s short-term interest bearing liabilities amounted to Rs. 234.5 billion as at 31 March 2023 and long-term amount was Rs. 154 billion.
The Minister said in this manner there is no burden imposed on the Sri Lankan taxpayer, and the Government hopes to complete the restructure of the airline within six months. He called on all employees and unions to support its turnaround, and expressed confidence the state could recover the funds through the sale of shares. Minister De Silva added he has instructed his Ministry to ensure there are no increments or perks granted to any sections of staff until the end of the process, and to cut unnecessary foreign travel.
“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. This is merely a sale of shares, whereby a foreign investor will receive 49% of shares, but if there is a local partner we could negotiate a different figure. The name of the national carrier of Sri Lanka will not change; it’s merely a change of administration and shareholding,” the Minister said.
When queried about national carrier’s management comments that they could potentially turn the airline around, De Silva said they have failed to do this, and there is too much at stake to wait for that to happen. “We cannot move this airline ahead without an investor. That is why we are taking this cost as a temporary measure to help that process,” the Minister added.
Minister De Silva stated that in this manner the Government hopes to safeguard the rights of the SriLankan taxpayer, and this interim arrangement will protect jobs. A review meeting has been set up every fortnight to monitor income and expenditure of the airline up until the restructuring process is complete. The airline had continued to pay interest costs of dues to the Ceylon Petroleum Corporation, but not serviced capital. The restructure will be essential to stem the current decline in the airline, the Minister said, which has been plagued with flight delays and cancellations that have resulted in additional costs.
“We are confident we can make much more than $ 500 million from the restructuring of the airline and that money will come directly to the treasury. What happened to the country and its economy is what happened to SriLankan Airlines. But we will turn around the airline just as we did the economy,” he stated.
In a related development the deadline for Expressions of Interest for the national carrier too has been extended till the 22 April. The previous deadline was yesterday (5 March). Last week Minister de Silva implied the 5 March deadline as open auction raising concerns. The divestiture of SriLankan Airlines is handled by the SOE Restructuring Unit and bids for Request for Qualification process is still on. The International Finance Corporation (IFC) is the Transaction Advisors to the Government.
