SriLankan Airlines Partial Privatization: Government Invites Bids for Majority Stake

The Sri Lankan government has officially opened the doors for interested parties to prequalify for the bidding process aimed at acquiring a majority stake in SriLankan Airlines (UL). The invitation, published on the Ministry of Finance website on October 31, positions the sale as a “great opportunity for profitable growth in the hands of the right investor, building a major hub in the Indian Ocean.”

With the government holding a 99.52% stake in SriLankan Airlines, the move to sell a majority stake to a strategic investor is part of a broader initiative to privatize state-owned entities. Prospective investors must meet specific technical, legal, and financial criteria, including a minimum net worth of USD 200 million. Non-financial institution bidders must also demonstrate the capacity to secure loans of at least USD 100 million, while financial institutions must possess investible funds and/or capital totaling at least USD 300 million. The government invites applications from body corporates, companies, firms, and legal entities or consortiums.

Following economic challenges in 2022, the Sri Lankan government has opted for privatization as a means of revitalizing state-owned entities, including SriLankan Airlines, historically one of the country’s major loss-making entities. The airline is currently undergoing restructuring, aiming to address debts and liabilities on its balance sheet. Sri Lanka’s aviation minister, Nimal Siripala de Silva, emphasized the need to relieve taxpayers from continuously supporting the airline, which entered the restructuring process with debts of around USD 1.2 billion.

SriLankan Airlines operates a fleet of fourteen Airbus narrowbodies (including one wet-leased) and ten Airbus widebodies. With 19 operational aircraft, the airline serves 38 destinations in 22 countries, annually catering to around five million passengers and transporting 80,000 tonnes of cargo.

The prequalification application deadline is set for December 5, 2023, with successful applicants being notified by mid-December. Over the following months, they will have the opportunity for site visits, one-on-one meetings, and due diligence. The final bid submission deadline is expected in April 2024, with letters of intent issued to the successful bidder the following month. Definitive agreements are slated to be entered into and signed in June. The SriLankan Airlines privatization process marks a crucial step in the government’s broader economic strategy, and interested investors are encouraged to participate in this landmark opportunity.