Warning Issued as Sri Lanka Plans Partial Privatization of SriLankan Airlines

Sri Lanka’s Minister of Ports, Shipping, and Aviation, Nimal Siripala de Silva, has issued a warning that more aircraft at state-owned SriLankan Airlines may be grounded if the government faces resistance from stakeholders, especially employee groups and unions, regarding the planned partial privatization. The government aims to sell a 49% stake in the airline and form a joint venture agreement with the buyer.

Key points related to this development:

1. Minister’s Warning:
   • Minister Nimal Siripala de Silva warned that if the partial privatization did not proceed, the government might have to ground aircraft at some point.
   • He emphasized that if there were no takers for the minority stake, it would be the trade unions, pilots, engineers, and cabin crews who would face the consequences.
2. Expression of Interest (EOI) Process:
   • The minister revealed plans to initiate the expression of interest (EOI) process for the partial privatization as early as November.
   • Under existing Sri Lankan law, the government cannot sell off all of the airline and intends to sell a 49% stake.
3. Capital Injection Requirement:
   • Minister de Silva highlighted the need for a capital injection of at least USD500 million to make the airline viable.
   • The government plans to enter into a joint venture to secure the necessary capital, as it lacks the financial resources for such an injection.
4. Operational Details:
   • SriLankan Airlines currently operates 19 operational aircraft, including A320-200N, A321-200N, and A330-200 types.
   • All aircraft in SriLankan’s fleet are leased, and the government aims to improve the airline’s financial position through privatization.
5. Expression of Interest Process Preparation:
   • The government, in consultation with the World Bank and International Monetary Fund, appointed an independent advisor, believed to be the International Finance Corporation (IFC), to oversee the sale process.
   • Minister de Silva is pressing for a prompt completion of the joint venture, with preparations for the expression of interest expected to be ready by the end of October.
6. Support for Privatization:
   • While unions and employee groups have expressed concerns about privatization plans, the government suggests that opposition to such initiatives has decreased over time.
   • Suresh Shah, head of the State-Owned Enterprises Restructuring Unit, stated that there is a growing realization that privatization could lead to better returns for employees and contribute to the country’s economic improvement.

For the latest updates and further details, official statements and reputable news sources are recommended.

(Note: The information provided is based on available reports and publicly accessible sources as of the knowledge cutoff date in January 2022.)