Bids for SriLankan divestiture extended by 45 days

The closing of the request for proposals for the divesting of SriLankan Airlines which was due on March 5 has now been extended by a further 45 days, Shipping and Aviation Minister Nimal Siripala De Silva said.

The delays experienced by tourists and other passengers and also high debt of around USD 1.2 billion too may be negative factors for an investor to consider taking over the airline.

The Minister said that with mounting debt and other issues it is difficult for the state to maintain the airline and if it were to be shut down the jobs of over 6,000 employees would be at stake. Hence President Ranil Wickremesinghe has forwarded a proposal to the Cabinet to provide a financial injection of over USD 500 million towards the airline to reduce its debt by almost half.”

Minister explained that this includes temporarily absorbing the aviation fuel Bill owned by the airline to the Ceylon Petroleum Corporation, (CPC) dues owed to the two State banks, Bank of Ceylon and People’s Bank and also to the Treasury.

“We will also meet every two weeks to ensure that there are no salary increases to employees. In addition several cost cutting measures too would be introduced including curtailing foreign tours.”

The Minister said that after initiating these measures and once again reinvesting capital given by the government to address urgent maintenance issues, the airline would be made more attractive to an investor.

The Minister said that by divesting the airline they hope to get over US$ 500 million and this would be re-invested to pay back the state banks, CPC and settle other overheads and mainly safeguard employee interests.” Hence the divesting of the airline will not be a burden to the taxpayer of the country unlike in the past. SriLankan Airlines was privatised to Emirates airline and during the time it made a profit and no job cuts were initiated while the employees were also on a better footing. However after the then government taking it over, the airline due to mismanagement and corruption went into high debt and the taxpayers’ money was used regularly to upkeep the airline.

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