No takers for revamping Sri Lankan Airlines, says Minister

The balance sheet of the airline has to be restructured first as it is not saleable. File photo.

The Sri Lankan government has made it clear that no airline company has “formally expressed” interest in the proposed revamping of SriLankan Airlines.

Responding to a query from The Hindu on whether Qatar Airways was being contemplated as a possible international partner, Eran Wickramaratne, Deputy Minister of the Public Enterprise Department under whose purview the airline comes, said “there is no specific party. There are many names that keep coming up from time to time. No one has formally expressed interest.”

“Every party talks to very many different people in the government,” he added.

Inevitable move

The restructuring of the airlines had become inevitable as the organisation had been in the red for the past eight years and its liabilities stood at $ 3.2 billion as on December 31, 2015.

Explaining how the revamp plan would be carried out, the Minister said the balance sheet of SriLankan Airlines had to be restructured first as it was “not saleable.” For this, valuation had to be carried out by engaging one or more parties.

Disclosing that the National Savings Bank (which also comes under the Public Enterprise Department) had been chosen as the lead manager, he said an international investment bank with aviation expertise had to be selected, as “there is no local party with airlines expertise.”

With the assistance of the investment bank, the documents for request for proposals would be issued and eventually, one party would be chosen for the proposed partnership. The Deputy Minister was confident that the process up to the selection of the party for the partnership, which he called the “first part”, would be completed in six months.

Of the orders placed in 2014 (during the previous Rajapaksa regime) for the purchase of new aircraft (A 350-900), Mr. Wickramaratne said four aircraft were to be delivered in the immediate future. Of them, one had been “laid off at a reasonably good price.” Negotiations were on with other airlines for the other three.

Huge penalties

He also explained how difficult it was to cancel the orders straightaway for the aircraft, as there would be “huge penalties.” He questioned the rationale behind the placement of the orders for wide-bodied aircraft when the airlines had been operating more regional services.