SriLankan Airlines (UL, Colombo International) is considering partially privatizing its inflight catering unit, SriLankan Catering, airline sources have told The Daily Mirror newspaper.

According to the report, the unit is looking at a possible IPO to raise up to USD85 million through the sale of a 40-45% stake in the next three months.

The unit was set up in 1979 as a joint-venture between previous national carrier AirLanka (Colombo International) and Thai Airways International (TG, Bangkok Suvarnabhumi). In 1998, AirLanka bought out the Thais thus absorbing the firm into its fold.

The move is part of SriLankan Airlines' Red-to-Black restructuring programme which aims to curb heavy annual losses said to amount to LKR131 billion (USD916 million) for the last six years. As part of the programme, SriLankan has announced it will terminate all European routes - except London Heathrow - later this year while a resumption in service to Australia has been deferred indefinitely.

In addition, Chief Executive Officer (CEO) Suren Ratwatte has said the airline may try and renegotiate a deal with Airbus (AIB, Toulouse Blagnac) for four A350-900s and six A330-300s to encompass narrowbody A320 Family jets instead.