SriLanka airline bailed out with Rs60bn, Rs107bn hole in balance sheet
Nov 26, 2017 14:36 PM GMT+0530 | 1 Comment(s)
ECONOMYNEXT - Sri Lanka has given a 60 billion rupee bailout for state-run SriLankan Airlines to get domestic and international funding in July 2017 with the airline group running with 107 billion rupee hole in the balance sheet.
The airline group, which also includes a profitable catering unit, has lost 5.9 billion rupees from April to August 2017, a finance ministry report said.
"Having considered the deteriorated financial position, the government of Sri Lanka (GOSL) as the principal owner of the airline companies secured Rs. 30 billion and US dollar 210 million bank loans as at the end of July 2017 to the SLA and Mihin Lanka Limited (MLL)," the report said.
"Further, in order to secure the going concern status of the SLA, the treasury issued a letter of support ensuring continuous assistance for running business until the ongoing restructuring process as instructed by the cabinet of ministers."
By April, Sri Lankan Airlines had negative net assets of 107.7 billion rupee by April 2017, with the hole in the balance sheet up from 80.4 billion rupees a year earlier, after 28.8 billion rupee loss.
Sri Lanka's Auditor General, without qualifying the accounts, noted that a "material uncertainty exists" casting significant doubt on the group's ability to continue to operate, but state support and letters of comfort was making the group a going concern.
SriLankan Airlines, started making losses under the Rajapaksa regime when Dubai-based Emirates was kicked out as managing shareholder.
But the airline had made a 40 billion rupee loss under the current administration becoming a high profile symbol of mis-management and losses, after the failure to privatize the carrier.