Potential Investors Rethink SriLankan Airlines Stake Amid Negative Publicity, Says Minister

Sri Lanka’s Aviation Minister, Nimal Siripala, has voiced concerns over the cooling interest of potential investors in acquiring a majority stake in the national carrier, SriLankan Airlines, due to the airline’s tarnished reputation. During a media conference on February 26, Siripala highlighted the withdrawal considerations of some bidders ahead of the March 5 deadline for expressions of interest, as reported by Colombo’s Daily FT. The minister’s remarks shed light on the challenging path toward privatizing the state-owned airline, which is part of the government’s broader initiative to divest from various public enterprises.

The backdrop of this development is a series of operational disruptions at Colombo Airport, which recently led to public apologies from SriLankan Airlines for affecting the travel plans of thousands of passengers. These incidents have exacerbated the negative perception of the airline, complicating the privatization efforts. Siripala criticized the airline’s management practices, particularly pointing out issues with its recruitment processes and employee resistance, especially from the profitable ground handling unit, which he believes should not have been under the airline’s purview.

Amidst these privatization challenges, Siripala and SriLankan Airlines Chairman Ashok Pathirage engaged in a discussion that also highlighted government-related hurdles, such as cumbersome procurement processes that impede the airline’s fleet expansion plans. Despite intentions to lease three A320s and engage in talks for six A330s by year-end, the airline faces significant delays due to these procedural obstacles and the global surge in demand for aircraft.

SriLankan Airlines’ current fleet predicament, as detailed by ch-aviation, includes 26 aircraft, with nine out of service due to various reasons, including maintenance and engine issues. CEO Richard Nuttall underscored the difficulties in maintaining operational capacity and pursuing growth amidst a tight market for aircraft and spare parts, particularly highlighting the Pratt & Whitney engine problems affecting some of the carrier’s Airbus narrowbodies.

The unfolding situation at SriLankan Airlines encapsulates the complexities of privatizing a national carrier marred by operational setbacks and public relations challenges. As the deadline for investor expressions of interest approaches, the government’s efforts to revitalize the airline through privatization face significant headwinds, reflecting the broader challenges of reforming state-owned enterprises in a competitive and rapidly changing aviation industry.