According to yesterday’s statement from Minister of Aviation Nimal Siripala De Silva, the debt-ridden SriLankan Airlines, as well as SriLankan Catering and SriLankan Airlines Ground Handling, will be subject to restrictions.
As no investor would be interested in acquiring SriLankan Airlines alone, he stated that 49% stakes in each of SriLankan Catering and Ground Handling, which are both profitable businesses, would be offered along with SriLankan Airlines for reorganization. He claimed that this action was taken because the government lacked the resources to help the airline pay back the mortgages and loans it had taken out, and because the airline’s operations had been severely hampered over the previous few years by the global C-19 pandemic, a decline in tourism, high aviation fuel costs, and other overheads.
A significant selling factor for SriLankan is that it has landing rights in 26 nations. SriLankan Airlines must be restructured and must secure capital investments; if these investments are not made, SriLankan Airlines would undoubtedly fail and have to be shut down, which will cause social unrest for its 6,370 local and international personnel.
“What we are trying to do is a rescue operation.It is the responsibility of the Government to safeguard the employment opportunities of Sri Lankan Airlines and its subsidiaries without creating an environment for retrenchment and this was also pointed out to the unions which gave us positive sentiments.”
When SriLankan was conducting business as a joint venture with Emirates, Minister De Silva recalled, it was profitable and did not burden the government. Due to defaulted payments to Peoples Bank, Bank of Ceylon, and Ceylon Petroleum Corporation, Sri Lanka must pay USD 1,002 million (about Rs. 401 billion) to domestic and foreign parties. This has prompted the government to use tax payer money.
“If SriLankan can be urgently restructured as a successful business venture the financial burden of these institutions too would reduce, helping them to become stronger.” The IMF too has highlighted the importance of restructuring SriLankan Airlines. SriLankan Chairman Ashok Pathirage said that countries in the European Region and Asia (even in India) and national carriers owned and managed by the respective Government entities are now, either privatized or operating as a Private Public Partnership.
SriLankan doesn’t have absolute ownership to any of the 26 aircraft that it possesses as they are leased. “We don’t mind forgoing some of the leases as they were signed at very high rentals.”
He further emphasized that airline employees receive salaries that are in accordance with general industry standards and are not overpaid. “There are huge HR demands for the aviation sector and we are looking at methods to retain them.”