The CEO of SriLankan Airlines (UL, Colombo International) is amenable to the airline's privatisation in order to help it pay off debts incurred during the pandemic and fund future growth. Richard Nuttall's admitted willingness to take SriLankan out of state ownership coincides with the news that the airline plans to halve its USD1.046 billion debt by selling stakes in its catering and ground handling businesses.
"We are open to the proposal for privatisation from the government," Nuttal told Sri Lanka's Gulf Times outlet. "We have been in dialogue with our ministry and the government over the different options for privatisation. We are now awaiting a final cabinet decision on the way forward."
Meanwhile, SriLankan chairman Ashok Pathirage says he expects to get USD600 million from selling 49% of SriLankan Airlines Ground Handling and SriLankan Catering. Both businesses enjoy monopolies at Colombo's Bandaranaike International Airport, which according to the ch-aviation PRO airports module, is served by 29 airlines.
In August, the Sri Lankan government called for expressions of interest to acquire the 49% stakes and said the funds raised would help settle the USD325 million owed to the state-owned Ceylon Petroleum Corporation (CPC) and Airport and Aviation Services Limited (AASL) while the balance would assist with settling the USD300 million debt owed to the (also state-owned) Bank of Ceylon and People's Bank.
According to Nuttal, SriLankan Airlines has been "operationally profitable" since April and the CEO hopes to at least break even for the Sri Lankan fiscal year ending March 31, 2023.
"The challenges we have are around funding and growth. We still have outstanding debts from Covid times, and we have a number of engines in the shop for overhaul, and aircraft that are due to finish their leases. If we can privatise or find another source of funding, then we have an opportunity to grow," he said. “We believe we should ideally be at least 50% bigger within three years to meet the needs of our current network and to deliver maximum efficiencies. If funding does not become available and we need to keep living off our cash flows as at present, then this future may take a little longer.”
According to the ch-aviation PRO airlines module, SriLankan Airlines to 39 destinations in 23 countries with a fleet of five A320-200s, two A320-200Ns, one A321-200, four A321-200Ns, five A330-200s, and seven A330-300s. However, three narrowbodies and two widebodies are currently classed as inactive. Nuttal says most of the growth targets will come from frequency increases, but he notes that the airline has its eye on three or four new destinations while two undisclosed routes are underperforming.
"We are managing to limit the losses by proactively managing capacity and we believe they will work as tourism returns,” he said.
