brand logo

SriLankan to halve $ 1 bn debt  via sale of stakes in operation

31 Oct 2022

  • SriLankan Airlines Chairman expects catering and ground handling units to fetch $ 600 mn
  • Says cutting down CPC and State bank debts will attract investors
  • Believes ground handling could be worth $ 900 mn if made separate entity
By Imesh Ranasinghe  SriLankan Airlines (SLA) plans to earn $ 600 million from the sale of stakes of SriLankan Catering Ltd. and the airline’s ground handling unit, thereby reducing SLA’s overall debt of $ 1.046 billion by half, said SLA Chairman Ashok Pathirage. Speaking at an interview with TV Derana last Friday (28), he said that SLA could get $ 200 million and $ 400 million, respectively, through the sale of a 49% stake in SriLankan Airlines’ catering and ground handling units, and use that money to reduce its debt by $ 600 million, making the airline more attractive to potential investors. He said the ground handling unit at the airline will have to be established as a separate entity, as he believes it could thus be valued at $ 800-900 million. Pathirage said that the funds received by the airline through these investments will be prioritised towards settling its dues to the Ceylon Petroleum Corporation (CPC) and the two State banks. In August, the Government announced the plans to call for Expressions of Interest (EOIs) to sell a 49% stake in SriLankan catering and ground handling units, and it was revealed that debt payable to Bank of Ceylon and People’s Bank by SLA stood at $ 386 million, while arrears to CPC, Aviation Services, and others were $ 325 million. The Government intends to reduce the debt burden of SLA through the investments received and sell 49% of the airline along with its management later, completing the restructuring of the airline. Further, Pathirage said that the airline incurred a loss of $ 18 million in the period April-September 2022, mainly due to a reduced number of passengers travelling due to the civil unrest in April and a shortage of aviation fuel in the country that forced the airline to obtain the required fuel from India. However, he believes that the airline would record a net profit for the financial year 2022/23, for the first time since Emirates left the airline in 2008. The airline recorded a Group Net Operating Profit of $ 1.7 million for the January-March quarter of 2022, which was its first profitable quarter (in US dollar terms) after six years. Moreover, he said that he believes that the airline needs to reduce one or two crew members from each aircraft, with the agreement of the unions, as the current number of crew members per aircraft is too high.  


More News..