Completion of SriLankan restructuring within the next six months
The completion of the SriLankan Airlines restructuring is anticipated within the next six months. It will then be transferred to the identified investor under conditions that safeguard the rights of employees.
“Through this initiative, we aspire to enhance the performance of SriLankan Airlines,” said Ports and Civil Aviation Minister Nimal Siripala de Silva.
To address the situation, the government has already initiated efforts to engage the support of international financial experts, with the aim of conducting the restructuring process in a transparent manner, as part of their commitment to building a stable country.
The proposal for the restructuring process of SriLankan Airlines was submitted to the Cabinet six months ago. “Although some profits are generated through ground operations and SriLankan Catering Company, they are insufficient to cover the airline’s losses.”
SriLankan Airlines carries a debt of US$ 1.2 billion to various organizations, including local state banks, accumulated unpaid fuel bills and also have had to cover outstanding payments for international bonds and leased planes.
The airline is primarily funded by the taxes of ordinary citizens, including those who have never experienced air travel. We take pride in having our own national airline, but we must question whether the cost associated with maintaining it is justified and if it’s unsustainable to be operating an airline under such immense debt.”
The minister emphasized that the government cannot sustain the financial losses incurred by SriLankan Airlines and it would be unfair to continue using taxpayer funds in this manner. Due to economic challenges, including foreign exchange difficulties, the government is unable to provide financial support for losses as it has done in the past.
“This approach is no longer equitable, which led to the decision to restructure SriLankan Airlines. The restructuring plan entails the government retaining a 51% share, with the remaining 49% to be offered to another investor. If immediate restructuring measures are not implemented there will be concerns about the potential loss of jobs for approximately 6,000 employees at SriLankan Airlines.”
“It must be recalled that when it was managed under the control of Emirates Airlines it generated a profit of Rs. 30 million but after the privatisation it has struggled to achieve profitability.”
The airline industry worldwide experienced a severe setback due to the COVID-19 epidemic and many nations had to ground their planes. In fact, even Qatar Airways had to lay off 72 pilots. In contrast, our government ensured that our pilots received half their salaries, even when they were not actively flying. This gesture was driven by a humanitarian approach.