The Sri Lankan government has decided to restructure rather than privatise SriLankan Airlines (UL, Colombo International) after none of the entities that expressed interest in it were deemed suitable.

A July 3 media statement on the Sri Lankan government website confirmed the change of heart, with the aviation minister, Nimal Siripala de Silva, saying none of the bidding parties were "worthy."

In 2023, the government decided to sell a 51% stake in the state-owned carrier. The sale was part of a broader economic reform agenda that would see the government sell stakes in a raft of state-owned entities. De Silva had previously said it was unfair to expect taxpayers to keep propping up the airline, which commenced a restructuring process earlier this decade while burdened with debts of approximately USD1.2 billion.

In April, in response to a formal solicitation process, requests for qualification were received from AirAsia sister firm AirAsia Consulting Sdn. Bhd., Dharshaan Elite Investment Holding (Pvt.) Ltd, FITS Aviation (Private) Limited t/a FitsAir (8D, Colombo International), Sherisha Technologies Private Limited, Treasure Republic Guardians Limited, and Hayleys PLC.

"We are not going to sell SriLankan Airlines but restructure it," de Silva said this week. "According to Sri Lankan law, only 49% of the shares of SriLankan Airlines can be given to (a non-Sri Lankan) company. But there is minimal interest in the world for that. Only six parties bid for the airline, and we didn't find anyone worthy among them. Even if we were to extend this opportunity to a Sri Lankan entrepreneur, their capabilities would need to be demonstrated."

The minister did not elaborate on his planned restructuring agenda or comment on the restructuring process already underway at SriLankan. However, he did express some regret a strong local investor was not found to buy the stake. "The parties should have a strong balance sheet and expertise, as there are the jobs of 6,000 people at stake," de Silva said.

According to ch-aviation PRO airlines data, SriLankan Airlines flies 37 airports in 21 countries with a fleet of 22 aircraft, including seven A320-200s, two A320-200Ns, four A321-200Ns, two A330-200s, and seven A330-300s.