Debt sharing with int’l partner for UL still on cards

By Uditha Jayasinghe 

Getting Cabinet approval to take on the full $3.2 billion debt of SriLankan Airlines is merely an effort to “dress up the bride” as the Government seeks an international partner with sharing of debt still on the cards, a top minister said on Monday. 

Public Enterprise Development Deputy Minister Eran Wickramaratne told members of the Foreign Correspondents Association (FCA) that obtaining Cabinet approval to transfer the full weight of the national carrier’s debt was a contingency plan before seeking an international partner. 

The Government will seek out an investment bank with aviation experience to attract and negotiate with different international airlines before taking its pick and thrashing out the specifics of a public-private partnership, he said. State-run National Savings Bank has been appointed as the lead manager for the venture. 

“I believe the first stage of picking a party will take six months. I feel this is highly optimistic but if you ask others then they will say it can be done faster,” he told journalists. “Currently nobody has formally expressed interest.” 

The global aviation industry has evolved rapidly from where the national carrier was when it negotiated the previous deal with Emirates in 1998, the minister said observing SriLankan would now provide different values to an international partner. Out of the four A350-900 that were ordered as part of a $2.3 billion deal with Airbus, Wickramaratne noted one has already been laid off to ease pressure on the balance sheet. 

“We have found out the meeting to buy the new aircraft was not even held at SriLankan,” the Deputy Minister remarked as he acknowledged investigations into the inner workings of the national carrier during the previous Government were yet to seriously begin.

 Despite the decision to stop manufacture of four flights and possible sale of the A350-900 as part of the restricting effort Wickramaratne was adamant that new aircraft suitable for SriLankan Airlines’s future role would be eventually procured to keep the company growing. A new partner would have the power to decide what routes and flights to operate once SriLankan is handed over. 

Responding to questions on the possible impact on the tourism industry from trimming operations the Deputy Ministers insisted that if the Government decided to continue subsidising SriLankan it should be done directly so that the management can be held accountable, removing it from the opaque management system currently observed. He also admitted that looking at SriLankan’s history it would be impractical to expect the State to run the national carrier profitably.