ECONOMYNEXT – A decision on whether to spin-off subsidiaries of SriLankan Airlines or privatize the entire entity as a single entity would be made soon by a committee, Aviation Minister Nimal Siripala de Silva said.
SriLankan Airlines official had been summoned to the committee earlier this week.
The Ministry of Aviation first proposed that 49 percent of the catering unit, and 49 percent of ground-handling – which had given over to SriLankan – be sold to settle its debt. Then 49 percent of SriLankan be sold.
“There are two schools of thought,” Minister de Silva said. “At the cabinet the matter was discussed and his Excellency the President has referred the matter to the Treasury.”
Catering and ground-handling are captive profitable businesses which may represent easy money for those who buy the firms, according to some observers.
Ground-handling, which is a separate business from airline operations, however also represents easy money for the airline and can potentially bring tax revenues to the state if spun off and taxed appropriately.
Meanwhile Minister de Silva said the Chairman and Board was summoned before a Treasury Committee which is looking in to the matter.
“And they are discussing what is the best way out,” he said. “We will be guided not by a political decision but by a professional decision that will be given. So I think in one or two weeks they will consider this and given us a professional opinion.”
SriLankan Airlines has about a billion US dollars of debt including a sovereign guaranteed debt, and arrears to state-run Ceylon Petroleum Corporation on fuel bought before 2019.
SriLankan Airlines has reported large losses since it was taken from its managing shareholder by former President Mahinda Rajapaksa. Some of the recent losses are from the collapse of the central bank’s soft-peg (flexible exchange rate). (Colombo/Dec04/2022)