The Sri Lankan government remains undecided about how it will finance the planned expansion of SriLankan Airlines (UL, Colombo International), according to the country's Daily Mirror newspaper. Instead, the government is focused on restructuring the state-owned carrier's debt.
Reasonably advanced plans to privatise SriLankan Airlines were abandoned in mid-2024 after none of the potential buyers were deemed up to scratch. Subsequent elections, leading to the installation of a new president and government, have seen privatisation plans canned.
The new government is focused on the importance of tourism to Sri Lanka's economy and recognises SriLankan Airlines' role in ferrying those tourists in and out of country. Among other outcomes, the government figures it can do a better job of capitalising on tourist demand and the revenue it brings if it retains control of the airline.
SriLankan Airlines is holding onto debts of around USD1.2 billion. The government has agreed to take care of around half the amount. The new government recently said it would assist with legacy debt and interest payments. However, it is less willing to cover SriLankan's day-to-day operational shortfalls.
SriLankan Airlines CEO Richard Nuttall has previously said the carrier's high debt level was holding back its growth. The new government has flagged fleet and network expansion but there is no locked-in strategy to pay for it.
SriLankan Airlines has submitted its business plan to the government with several options to restore its financial fortunes. After making a profit in 2023, the carrier is expected to post a loss in calendar 2024.
