Strategic partner for SriLankan suggested by committee
Jan 31, 2019 18:28 PM GMT+0530 | 0 Comment(s)
ECONOMYNEXT - An expert committee appointed by President Maithripala Sirisena had suggested finding a strategic partner to make the airline viable and cutting debt by selling down holdings in peripheral units, State Minister of Finance Eran Wickremeratne said.
SriLankan Airlines now has 900 million dollars of liabilities and had run a string of losses since Dubai-based Emirates was jettisoned as managing shareholder in 2008. In the last nine months, it had posted a 40-billion rupee loss.
The report of the committee had recommended that up to a 49 percent stake be given to a strategic partner, Wickremeratne said.
Shareholders in Sri Lanka, which could include a private party should hold a 51 percent stake in the airline to retain national carrier status.
Up to 49 percent of its catering unit could be sold to generate funds internally. Up to 49 percent of a ground handling unit which will have to be incorporated, will also be sold to generate funds. Engineering could also be spun off similarly with a stake sold.
The partner who takes the stake in the airline could also invest in the subsidiaries. Or it could be separate investors.
Wickremeratne said the airline's debt had to be re-structured.
Generating funds internally could reduce the debt that is taken on by the government.
The committee had also considered closing down and restarting an airline but had decided against it, Wickremeratne said. A management contract was also considered.
However, when the airline was known as Air Ceylon, a management contract had failed to bring growth.
The committee had suggested that the preferable partner should be an airline.
The committee had also recommended that it was preferable if it was not a competitor.
It is not clear why such a recommendation was made, but many nationalists had claimed that Emirates was using SriLankan to feed its network.
Emirates made SriLankan the largest foreign airline into India. Now, Emirates is the largest.
In the three months to September 2018, Emirates had carried 639,000 passengers to India. SriLankan carried 223,606 passengers into India. (Colombo/Jan31/2019 - SB)