SriLankan Airlines, Ground Handling & Catering to go under the hammer

The debt ridden SriLankan Airlines will be restricted along with Srilankan Catering and SriLankan Airlines Ground Handling, said Minister of Aviation Nimal Siripala De Silva yesterday.

He said that 49% stake of each SriLankan Catering and Ground Handling which are both making profits would be offered along with SriLankan Airlines for re-structuring as no investor would be keen only to takeover SriLankan. He said that this move was taken as the government does not have the financial ability to support the airline to repay the mortgages and loans it obtained as the airline operation was severely affected for the past few years due to dip in tourism and global C-19 pandemic, high aviation fuel prices and other overheads.

SriLankan Airlines overburdened with local and foreign loans

The fact that SriLankan has landing rights to 26 countries is a major plus point to market the airline. Restructuring of SriLankan Airlines and obtaining capital investments is critically vital and if such capital infusion does not happen, SriLankan Airlines will certainly collapse and the company will have to be closed down which will create a social distress to 6,370 local and foreign employees of SriLankan.

“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.”

Minister De Silva recalled that SriLankan was making profits when it was operating on a joint venture with Emirates and was not a burden to the Government back then. SriLankan has to pay USD 1,002 million (around Rs. 401 bn) to local and foreign parties, defaulting payments to Peoples Bank and Bank of Ceylon, Ceylon Petroleum Corporation which has compelled the Government to allocate tax payer’s 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 also stressed that airline staff are not overpaid but are provided salaries in line with global industry norms. “There are huge HR demands for the aviation sector and we are looking at methods to retain them.”

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Colombo-Russia route halted due to high insurance stake

SriLankan Chairman Ashok Pathirage said that they are unable to restart the Colombo Russia route due to high stake in the insurance. “Due to the Ukraine Russia war we have to bear a high insurance premium and adding this to the passenger ticket would not make this route profitable,” he opined.

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Airport development to restart after SLA with IMF

Minister of Aviation Nimal Siripala De Silva said that the airport development project that was stalled would commence after a staff level agreement (SLA) was reached with the IMF. He said that 6% of the project has been completed. It’s not only the airport development project that is stopped but the Japanese government has stopped all their ongoing 12 development projects in Sri Lanka until the IMF deal materializes.”