Sri Lanka's Civil Aviation Minister Nimal Siripala says the restructuring of SriLankan Airlines (UL, Colombo International) must be completed within six months, adding that job losses may occur if people resist the change. His comments come as the Sri Lankan government continues its languorous privatisation push of multiple state-owned enterprises.
Speaking at a media event in Colombo on July 1, the minister said the state-owned airline's losses were unsustainable and could not go on. However, the government has been promoting SriLankan Airlines' restructuring and privatisation for at least 18 months now, with little tangible progress. In May 2022, newly appointed Prime Minister Ranil Wickremesinghe publicly pledged to privatise the carrier, without providing further details.
According to Siripala, the current partial privatisation plan involves the government retaining a 51% stake in the airline, with the remaining 49% made available to private investors. He said the proposal was submitted to the Sri Lankan cabinet for approval six months ago and has since gone to external consultants for their recommendations. Siripala referred to the period between 1998 and 2008 when Emirates (EK, Dubai International) operated the airline as the only time it has turned a profit in its history. Emirates divested its stake after a row with the Sri Lankan government. Since then, SriLankan Airlines has accrued a USD1.2 billion debt and earned a reputation for unreliability.
"Due to the economic problem, including the foreign exchange crisis in the country, the government is not able to provide money as usual when it is incurring losses. It is not fair to give like that. That is why it was decided to restructure the SriLankan Airlines," said Siripala. "Several institutions, including local state banks, have had to pay the arrears for international bonds and leased aircraft. Also, we have to pay for the fuel that we got without paying money. It is not possible to run an airline in debt like this."
Previously, the government said it would sell off SriLankan's profitable catering and ground handling arms, saying that doing so would pay off some but not all of the airline's debts, adding that the subsidiaries current earnings were insufficient to cover SriLankan's losses.
Siripala says any privatisation will come with conditions that will protect the rights of employees but warns that employees must not hinder the process, saying that "if this work is not done immediately, there is a risk of losing the jobs of around 6000 employees of SriLankan Airlines."
