Sri Lanka's State Enterprises Restructuring Unit (SRU) has extended the deadline for interested parties to submit a Request For Qualification (RFQ) to take part in the partial privatisation of SriLankan Airlines (UL, Colombo International). Submissions were due by December 5, 2023. However, the government agency has extended the deadline to January 9, 2024, after prospective bidders asked for more time.
SRU Director General Suresh Shah advised local media of the change late last week. Potential buyers of a majority stake in the perennially loss-making state-owned carrier have to satisfy specific technical, financial, and legal criteria, which the RFQ process addresses. Once pre-qualified, prospective buyers will be invited to bid sometime in the first quarter of 2024. Assuming no further delays, the SRU's current timeline seeks to have a bidder selected and a letter of intent to purchase signed by the end of May 2024.
Late last month, ch-aviation reported that multiple entities had expressed interest in SriLankan Airlines, although not all will necessarily progress into the formal RFQ stage. Among the entities eyeing the airline were Emirates, a resurgent Etihad Airways, and the Adani Group. India's Tata Sons, widely tipped to be interested in the carrier, was not among the interested parties. There are conflicting reports concerning the number of potential bidders, but Aviation Minister Nimal Siripala De Silva told the Economy Next outlet earlier this week that six entities had expressed interest in buying the stake and had attended meetings with Sri Lankan government representatives to discuss the matter.
The Sri Lankan government is selling stakes in several state-owned enterprises in an attempt to clean up the national balance sheet and shift the operations of what are largely commercial entities to the private sector. The partial privatisation of SriLankan Airlines coincides with the carrier's improving financial fortunes. In the 12 months to March 31, 2023, SriLankan Airlines would have turned a local currency profit for the first time in 15 years, except for the impact of foreign exchange losses and financing costs. The airline reported a group loss of LKR71.3 billion rupees (USD217.5 million) for the financial year, compared to a LKR163.5 billion (USD498.7 million) loss the previous fiscal year.
But for a foreign exchange loss of LKR63.1 billion (USD192.5 million) and financing costs of LKR51.5 billion (USD157 million) last year, SriLankan Airlines would have posted a local currency operating profit of LKR43.3 billion (USD132 million). SriLankan CEO Richard Nuttall has previously told ch-aviation that the airline's management accounts are in US dollars as earnings and costs are predominantly in foreign currencies. On its dollar accounts, SriLankan Airlines is either breaking even or marginally positive.
