SriLankan Airlines Privatisation Set to Conclude by Late Q2 2024

The privatisation process of Sri Lanka’s state-owned carrier, SriLankan Airlines, is anticipated to be finalized by June 30, 2024, according to statements from the head of Sri Lanka’s State-Owned Enterprises Restructuring Unit, Suresh Shah. Shah also mentioned that the International Finance Corporation (IFC), serving as the airline’s transaction advisor, is expected to present its proposal by the end of this year.

SriLankan Airlines is among the 85 state-run enterprises recommended by Shah’s agency for either full or partial privatization. The government is currently in talks with potential investors, including Emirates, the Adani Group, and Tata Sons. Emirates previously held a 43.63% stake in SriLankan Airlines and managed its daily operations but divested in 2010.

In June, SriLankan CEO Richard Nuttall highlighted the immediate priority of restructuring the airline’s balance sheet due to the high cost of servicing its debt. The airline posted a loss in local currency, attributed to currency depreciation and the impact on USD-denominated debt. The management accounts in USD indicate the airline is either breaking even or marginally positive.

Despite the ongoing privatisation efforts, SriLankan Airlines faces reliability issues, with a notable cancellation rate reportedly linked to a significant number of grounded aircraft. According to ch-aviation fleets advanced data, four out of 24 aircraft are currently out of service, including an A320-200N, two A321-200Ns, and an A330-200.

Minister Nimal Siripala de Silva mentioned in parliament that the airline requires more aircraft, and attempts to lease an additional A330 have been unsuccessful. Talks with lessors continue, with two requests for proposals issued for A330s, according to CEO Richard Nuttall. As the privatisation timeline progresses, the future of SriLankan Airlines will be closely monitored, considering ongoing operational challenges and efforts to secure additional aircraft.