The Sri Lankan government has formally invited interested parties to prequalify to bid for a majority stake in SriLankan Airlines (UL, Colombo International). In an October 31 notice published on the Ministry of Finance website, the government says buying a stake in the state-owned carrier is "a great opportunity for profitable growth in the hands of the right investor building a major hub in the Indian Ocean."
The Sri Lankan government currently owns 99.52% of SriLankan Airlines and intends to sell a majority stake to a strategic investor. However, potential investors must satisfy certain technical, legal, and financial requirements, including having a minimum net worth of USD200 million and demonstrating the capacity to raise loans of at least USD100 million if that bidder is not a financial institution. A financial institution must have available investible funds and/or capital of at least USD 300 million. Subject to satisfying the stated criteria, the government invites body corporates, companies, firms, and any other legal entity or consortiums to apply.
After weathering an economic crisis in 2022, the Sri Lankan government has decided to wholly or partially privatise multiple state-owned entities, including the national carrier, historically one of the country's biggest loss-making entities. SriLankan Airlines is currently restructuring the airline, which includes and/or removing debts and liabilities that are still on the balance sheet. Sri Lanka's aviation minister, Nimal Siripala de Silva, says it is unfair to expect taxpayers to keep propping up the airline, which went into the restructuring process with debts of approximately USD1.2 billion.
SriLankan Airlines has a fleet of fourteen Airbus narrowbodies (one is wet-leased) and ten Airbus widebodies. Nineteen of these aircraft are currently operational. The airline flies to 38 destinations in 22 countries and flies around five million passengers and 80,000 tonnes of cargo annually.
The deadline for submission of prequalification applications is December 5, 2023. The ministry will advise successful applicants by mid-December, and they will have the opportunity over the following months for site visits, one-on-one meetings, and due diligence. Currently, the ministry says the deadline for submission of final bids will be in April 2024. Letters of intent will be issued to the successful bidder the following month, and definitive agreements will be entered into and signed in June.
