RFPs to be issued for SriLankan Airlines
The Ministry of Public Enterprise Development is looking for an investment bank or a consultancy firm to facilitate the process of seeking a foreign partner to manage and invest in the ailing national carrier, SriLankan Airlines. ”We’ll issue the Request for Proposal (RFP) within the next three weeks calling for a financial adviser to restructure the national carrier,” its minister Kabir Hashim told the Business Times. He said once the RFPs are shortlisted, based on the proposals they will look for an equity or a management partner. Prime Minister Ranil Wickremesinghe told reporters on Tuesday that the state will absorb debt at SriLankan Airlines amounting to US$ 3.2 billion while an order for four A350 aircraft has been cancelled.
The national carrier suffered a loss of 16.329 billion rupees (US$112 million) according to its last 2014-2015 annual report while assets stood at 78,158 billion rupees ($535 million). The government has promised to retain the airline’s 7,800-workforce. ”We’re looking for expertise on a (new) model for SriLankan.” He added that officially they haven’t got any proposals by any investor, but unofficially many investors have shown interest. One such is the Qataris. A January 2016 meeting between Qatar Airways CEO Akbar Al Baker and Sri Lankan Prime Minister Ranil Wickremesinghe in Colombo has triggered speculation that the Doha carrier may be eyeing the airline. Industry sources said that Etihad was another interested party.
Other sources said that a consultancy firm will be selected soon to expedite the RFP process with immediate effect. The ministry has been directed to hold discussions with KPMG, Ernst & Young and PricewaterhouseCoopers and decide who should be assigned advisory services for the RPF process, the sources said. In another move, the Treasury has been directed to absorb total liabilities of SriLankan Airlines amounting to Rs.461 billion (US$3.2 billion) including payments of $2.3 billion to purchase eight A350 entered into by the Rajapaksa regime. The airline has been struggling since 2008 due to political interference in airline operations, mismanagement, rising oil prices (at one point in time) and competition from other carriers.
| Govt. stakes in Hilton, 2 hotels to be sold | |
| The Ministry of Public Enterprise Development, similar to restructuring the national carrier, is in the process of restructuring key state-owned enterprises with the three hotels owned by the state; Hilton, Grand Oriental and yet-to-be opened Hyatt; being the first on the list, its minister Kabir Hashim said. ”We’re gauging on how to maximise the value of these,” he said adding that plans are to either totally or partially divest them. He said proposals pertaining to this are actively being discussed. He pointed out that the plantations sector is another that’s thoroughly mismanaged to the extent that some worker statutory payments haven’t been made. Mr. Hashim said that several investors – both local and foreign have approached his ministry for investment in projects at state owned plantations involving dairy, new crops, tourism. “Cargills for an example is interested in a dairy project and we have already identified it under the Janatha Estates Development Board (JEDB). We gave them the nod to give us a proposal.” Mr. Hashim added that in all these proposals pertaining to the plantation sector, the state is eyeing the project on a total lease hold basis or will claim an equity stake. |