SriLankan Airlines restructuring: Consultant selection and low investor interest delay action
By- By Maheesha Mudugamuwa
The Morning LK News- 15 hours ago
02/07/23
The restructuring of SriLankan Airlines is likely to be delayed further due to the comprehensive process that it involves, including the process of due diligence, The Sunday Morning learns.
According to Minister of Ports, Shipping, and Aviation Nimal Siripala de Silva, the Treasury is in the process of shortlisting and selecting an international consultant to advise on the restructuring process.
Minister de Silva would not comment on the timeline of selecting a consultant and when the process would commence, adding that the matter was being handled by the Ministry of Finance and not by his ministry.
It is reliably learnt that although it was earlier said that the airline would be immediately restructured, there has been little investor approach for the airline so far. Even investors who have shown some keenness are yet to communicate their interest in getting on board.
In this backdrop, SriLankan Airlines CEO Ashok Pathirage stressed that he was discussing with the top management, together with all 11 unions, to manage the airline until the restructuring came into effect.
“The restructuring is currently being done by the State-Owned Enterprise Restructuring Unit. They are going through a process. The privatisation of an airline isn’t going to happen overnight. They have to follow the process in a transparent way. So far they are on their path,” he told The Sunday Morning.
Pathirage explained that although there was a proposal for the airline, it had to be shortlisted and the parties had to do due diligence, which would take a fair amount of time.
The CEO also noted that the airline had made profits last year, after 10 years, with Covid, protests in the country, and even without jet fuel availability.
Reiterating that the airline must be privatised for its sustainability, Pathirage said it was difficult to retain good people in management as every time governments, politicians, or chairmen changed, the management was affected.
“The airline has managed through the worst periods. It will survive. It has contributed to the economy by earning massive sums of dollars. People love the airline and the employees also love the airline. They are very supportive,” he added.
Nevertheless, Minister de Silva on Friday (30 June) said that there was a potential of losing around 6,000 employees at SriLankan Airlines if immediate restructuring measures were not implemented.
Addressing a press briefing held at the Presidential Media Centre on Friday (30), the Minister emphasised that the Government could not sustain the financial losses incurred by SriLankan Airlines and that it would be unfair to continue using taxpayer funds in this manner.
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 its commitment to building a stable country.
As the Minister explained, the restructuring plan entailed the Government retaining a 51% share, with the remaining 49% to be offered to another investor.
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, they are insufficient to cover the airline’s losses.
Considering the need to sell shares separately and the memorandum presented to the Cabinet, a series of proposals have been forwarded to international financial experts through the Ministry of Finance. “We are committed to transparently maximising the benefits of this process,” the Minister said.