Indian interest in SLA resumes; state scouts strategic investor
Serious interest from major Indian operators have been seen flowing in for national carrier, SriLankan Airlines for the past few months and some are likely to firm up after the Cabinet decided to cancel its sale, as per a statement by the state’s restructuring agency on Thursday.
“Globally there’s no real appetite for this carrier,” a source close to its restructuring told the Sunday Times Business on Friday. He said what was ongoing was a ‘bailout’ situation. “We need to take this asset off the Treasury. The future efforts will be for that,” a second source added. He said the government is likely to find a strategic buyer and then list it on the Colombo Stock Exchange.
On Thursday, the State Owned Enterprises Restructuring Unit said the airline divesture process has been terminated.
“The cabinet of ministers at a meeting on July 9 decided to terminate the current bidding process with regard to the divestiture of SriLankan Airlines,” it said in a statement, adding that the government will now follow an alternate strategy to be decided shortly to divest the airline base on a framework approved by Cabinet of Ministers.
SriLankan Airlines’ restructuring, despite having shortlisted three potential buyers, wasn’t progressing. The government had invited bids in September to sell the airline, a requirement set by the IMF in exchange for a bailout loan granted to the country last year.
Initially, six firms had shown interest in acquiring a stake in the airline, which had a debt of over US $ 2 billion by the end of the 2022/2023 financial year. They were domestic low cost carrier Fits Air, Air Asia Consulting, Hayleys Group, Dharshaan Elite Investment Holding Ltd, Sherisha Technologies Ltd, and Treasure Republic Guardians Ltd. There were no major international carriers interested in the national carrier contrary to wide speculation earlier of such a possibility.
The International Monetary Fund had highlighted the need for “restructuring” SriLankan Airlines as a condition for granting a $2.9 billion bailout to the government last year.
The bailout was provided after the country defaulted on its $46 billion external debt in April 2022 due to a severe shortage of foreign exchange required for essential imports.
With around 6,000 employees, SriLankan Airlines is the largest and most costly among the financially draining companies that are impacting the country’s budget and worsening its economic challenges.
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