The Sri Lankan government will pay LKR109.9 billion rupees (USD335.8 million) to help pay down the debts of SriLankan Airlines (UL, Colombo International) and tidy up its balance sheet ahead of its partial privatisation.
Colombo's Sunday Times reports that the Ministry of Finance will soon present a supplementary budget estimate to parliament for approval. The funding is part of a broader financial package the ministry wants approved as it moves to partially privatise multiple state-owned entities (SOEs). At least part of the funding is likely to be returned to the government via the settlement of debts owed to other SOEs, such as the Ceylon Petroleum Corporation.
The government has formally invited interested parties to prequalify to bid for a majority stake in SriLankan Airlines, saying the airline is "a great opportunity for profitable growth in the hands of the right investor building a major hub in the Indian Ocean."
SriLankan's debts total approximately USD1.2 billion. However, the bulk of those debts will likely be moved off the airline's balance sheets before the government sells the planned 51% stake. The International Finance Corporation (IFC), a member of the World Bank Group, is advising the government on the sale.
In the 12 months to March 31, 2023, SriLankan posted a local currency loss of LKR75.03 billion Sri Lankan rupees (USD232 million) on revenues of LKR365.17 billion (USD1.13 billion). However, this loss was due to the LKR currency depreciation and the impact on USD-denominated debt. SriLankan's management accounts are in USD as earnings and costs are predominantly in foreign currencies. The airline is either breaking even or marginally positive in its USD accounts.
Since 2015, SriLankan Airlines has accrued operational losses of USD575 million.
