SriLankan Airlines says ready for new partner
ECONOMYNEXT – State-run SriLankan Airlines is ready for a new private partner chosen from an ongoing negotiation process, as it cuts loses and focusses on more profitable regional routes, Chairman Ajith Dias said.
Sri Lanka’s government has appointed state-run National Savings Bank, BNP Parisbas and KPMG to seek a new partner.
Bloomberg Newswires reported on two weeks ago that Blackrock and TPG are among firms that responded to an expressions of interest that closed on September 23.
Dias said a new partner could be in place as early as November, but referred queries to investment bankers.
Sri Lanka’s government is expected to take-out a portion of its debt, which reports said could be around $460 million to strengthen its balance sheet prior to a stake sale. The new partner will be able to run the airline with a relatively clean balance sheet, he said.
SriLankan Airlines had negotiated the cancellation of three Airbus A350 aircraft from AerCap, a leasing company, paying terminations fees of around two years of their 12 year leases. Media reports have put the cancellation fee at Rs98 million, although officials declined to reveal an exact number.
Earlier in the year, it cancelled another Airbus order, paying $17.5 million.
Dias said the four aircraft represented a contingent liability of $800 million over the period of their leases. Keeping the A350s on their fleet, which could fly 17 hours at a stretch and was a surplus, its requirements would generated losses of $40 million a year, he said.
There are another four Airbus A350s on order, after 2020. Dias said it would be left to a new private partner to make a decision on those aircraft.
SriLankan is now focussing on more profitable regional routes and cutting European sector where it is losing money. It is maintaining London. SriLankan is taking delivery of five A320NEO short haul aircraft in 2017 and another in 2018 to deploy on regional routes, Chief Executive Suren Ratwatte said.