Dubai: SriLankan Airlines to invite bids for stake sale soon

SriLankan Airlines is expected to invite bids for stake sale in the coming months, as the national carrier has reached breakeven and expects to be profitable next year.

While speaking on the sidelines of the Arabian Travel Market in Dubai on Thursday, Richard Nuttall, CEO, SriLankan Airlines said the decision will be taken by the State-owned Enterprise Restructuring Unit at the Ministry of Finance but “we do know that the government wants to do it as fast it can. We expect to be in months, not years.”

The cash-strapped Colombo government approved the airline's privatisation in November last year in order to raise cash. There were reports of India’s Tata Group showing interest in buying a stake in Sri Lanka’s national carrier.

“Privatisation of Air India took around four years but Sri Lanka would like to do it in a quarter of a time, if possible,” Nuttall added.

He said some firms have shown interest but “what is real and what is wishful thinking is difficult to know at the moment.”

Replying to a query about Tata Group’s interest, he said considering Sri Lanka’s location and the number of flights operated by SriLankan Airlines to India, “there is definitely a strategic benefit for airlines that are interested in getting more access to India, particularly secondary cities, and perhaps carrying traffic to the East.”

Rumours of interest from Gulf carriers, however, were neither confirmed not denied.

Reaching breakeven

The South Asian country’s national carrier reached breakeven for the year ended on March 31, 2023. Its revenues reached $1 billion and posted an operating profit of $100 million but it had to pay $100 million in interest. It achieved breakeven for the first time in 15 years.

“We broke even when there were travel advisories and the country ran out of jet fuel. And forecast for next year is much stronger, assuming that things remain settled in the country as they are at the moment.”

He expects yields are going to stay high in the industry over the next year or two because all of the airlines are constrained.

Focus on increasing the frequency

Sri Lanka’s national carrier flies to about 35 destinations across different regions including 10 cities in India, most of the major Gulf cities, London, Paris and Frankfurt. In the East, it serves, Thailand, Malaysia, Singapore, South Korea, China, Japan, Sydney Melbourne, Australia and Maldives.

“At the moment our focus is on growing the fleet and increasing frequency and probably flying to more cities in India and Indian Ocean. We are connecting people from this region to multiple destinations in Indian Subcontinent and further East,” said Nuttall.

He said the national airline has been asked to increase its fleet to its pre-Covid-19 level of 27, from its current number of 23.

“We planned to grow to 35 aircraft over three years. But the government has asked to put it on hold on the growth plan until it starts the privatisation exercise,” he added.

It is currently looking at leasing five A320s and a similar number of A330s.

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