The Sri Lankan government has agreed to restructure and at least partially privatise SriLankan Airlines (UL, Colombo International) and has shifted the responsibility from working out how to do so from Nimal Siripala de Silva, the Minister of Ports, Shipping, and Aviation, to a specialist restructuring unit under the watch of finance minister Ranil Wickremesinghe.
"It has been recognised that Sri Lankan Airlines Company Limited as well as its subsidiary companies are needed to be restructured by handing over a considerable amount of shares and the management of the entity of Sri Lankan Airlines Company Limited to investors selected through a transparent procurement process," a cabinet decision taken on October 31, 2022, said.
"Considering the resolutions furnished by the Minister of Ports, Shipping, and Aviation, the Cabinet of Ministers took the decision to hand over the responsibility of studying the methodology of restructuring Sri Lankan Airlines Company Limited and making recommendations to the Cabinet of Ministers to the State-Owned Enterprises Restructuring Unit established under the Ministry of Finance, Economic Stabilisation, and National Policies."
The news follows SriLankan Airlines CEO Richard Nuttall recently saying he was open to the airline's privatisation. He suggested that it might be the only viable way to raise capital to pay down debt and fund future growth. The airline is also looking to raise around USD600 million by selling 49% stakes in its subsidiaries SriLankan Airlines Ground Handling and SriLankan Catering. In August, the Sri Lankan government called for expressions of interest to acquire the stakes. Notably, this week's cabinet note indicates any privatisation may include a management change at SriLankan Airlines.
Nuttall says that the airline is now operationally profitable and aims to breakeven this financial year however its losses in the financial year ending March 31, 2021, were LKR170 billion Sri Lankan rupees (USD464.4 million), with accumulated losses since the airline was renationalised in 2008 now running at LKR542 billion (USD1.48 billion).
