Govt. seeks investors for UL with $1 b of debt

Thursday, 23 August 2018 00:00 - - {{hitsCtrl.values.hits}}

Bloomberg: Sri Lanka has revived the process of privatising the state-run carrier that is saddled with at least $1 billion of debt, a year after talks with sole bidder TPG Capital collapsed following due diligence of the struggling airline.

The island nation’s Finance Ministry will seek preliminary bids for SriLankan Airlines Ltd. by September or October, Mano Tittawella, an advisor to the Ministry, said in an interview on 20 August. There has been “fairly serious” interest in the sale, and the Government expects to be in talks with at least two parties by the first quarter of next year, he said.

SriLankan Airlines is competing with Gulf carriers like Etihad Airways PJSC and Emirates Airline for customers in the local market, and years of losses have prompted the Government to look for a buyer and offer to absorb all the company’s debt. In the latest attempt that started in 2016, at least eight parties showed interest in a sale. Those included US buyout firm Blackstone Group LP and TPG, Bloomberg News reported at the time.

Emirates held 44% of SriLankan Airlines until 2010, when the Government bought the stake following the end of a 26-year civil war. The allure of buying into an airline in the tourism-dominated nation primarily lies in its proximity to India, the world’s fastest growing aviation market, where an emerging middle class is increasingly flying overseas for work and leisure.

The company’s accumulated losses stood at Rs. 141.1 billion ($879 million) as of March 2017, according to its annual report.