Sri Lanka to part-sell its national carrier

The Sri Lankan government this week invited bids from the global industry to run and manage the island’s national carrier, SriLankan Airlines, which has been suffering accumulated losses over the years.

While the airline has reported an operating profit for the period April 2022 to end March 2023, its accumulated debt is US$1.2 billion.

The government will retain 51 per cent control of the airline while selling off the remaining 49 per cent to investors

The authorities are banking on enticing investors with the intention of creating Colombo, the capital of Sri Lanka, as a regional (South Asia) travel hub with a huge focus on operations to and from India and other regional cities.

For over four decades, the airline has been operating as a full service carrier covering Europe, the Middle East, Indian sub-continent, South-east Asia, the Far East and Australia.

In advertisements carried on local and foreign media on Tuesday, the government announced Invitations to Tenders (ITTs). The divestiture is planned to be completed through a two-stage competitive bidding process – namely RFQ (Request for Qualification) and RFP (Request for Proposals for the Proposed Transaction). World Bank-affiliate, the International Finance Corporation is the financial advisor of this process.

Founded in 1979, SriLankan Airlines operates a fleet of 24 Airbus A320 and A330 aircraft and has a route network of 126 destinations in 61 countries.

The part sale (the government will retain 51 per cent control while offering investors a 49 per cent state) which has been talked of for several months has attracted interest particularly from Indian airline operators, industry sources said.

“It is good that the government is inviting private sector engagement in the airline which would help the airline grow further with its strong links to India,” one industry source said. SriLankan Airlines is the biggest foreign operator in the Indian market operating multiple daily and weekly flights to Indian destinations. India is also Sri Lanka’s biggest tourism source market.

This is the third time the airline is seeking a foreign partner, having expertise from Singapore Airlines at the inception followed by a partnership during 1998 to mid-2008 with Emirates.

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