Following government's failed attempt at finding a willing strategic partner for SriLankan Airlines (UL, Colombo International), a Malaysian leisure and hospitality conglomerate has come forward with its own plan to help salvage the ailing national carrier.

Government sources who spoke to Sri Lanka's Daily Mirror newspaper on condition of anonymity last week said Super Group Holdings Pvt. Ltd.'s proposal focussed on repositioning SriLankan Airlines as a longhaul low-cost carrier with Mihin Lanka to be resurrected as its shorthaul counterpart.

“The proposals also include operating SriLankan Airlines as an international, as well as regional, low-cost carrier and Mihin Lanka (Colombo International) as a regional and domestic carrier utilising the entire network now in use," the source said. "It is quite possible that Mihin Lanka will be re-branded and used as a low-cost carrier to cater to the South Asian region and the Indian Sub Continent in a concept of ‘City-to-City’ project [sic]."

As part of the plan, Colombo International Bandaranike and Hambantota Mattala International Airports would be refurbished for use as longhaul hubs while all domestic airports such as Colombo Ratmalana, Jaffna, Trincomalee Harbour, Koggala, and Anuradhapura will be put to use.

The proposal has already been forwarded to Sri Lanka's Economic Committee, chaired by Prime Minister Ranil Wickremesinghe, for review.

Earlier this year, AirAsia Group submitted its a plan to develop its own low-cost subsidiary in Sri Lanka - AirAsia Sri Lanka (Colombo International) - with government to retain the majority 51% stake. The proposal would, however, see the prospective LCC come into direct competition with SriLankan Airlines, a move government is unlikely to agree to.

Colombo agreed to extend a loan of LKR13.2 billion (USD86 million) to SriLankan Airlines just after Texas Pacific Group (TPG) pulled out of talks to acquire a 49% stake in the carrier in May this year. The US-based investment firm said at the time a due diligence of SriLankan's books and operations indicated it would not realise sufficient returns given the scale of the investment, both in terms of human and financial resources, needed to turn the airline profitable.

Overall, with no foreign investors willing to take the reigns of SriLankan Airlines given its substantial debt overhang, its future now hinges on the state successfully restructuring the loss-making carrier's operations.

Last week, airline chairman Ajit Dias warned it faced closure “in the larger interest of the country’s economy” if “tangible and sustainable restructuring" was not achieved.

Speaking to The Sunday Times, Dias said the cost-cutting drive would seek to achieve at least one of two objectives. Firstly, to render the airline attractive to foreign investment and secondly, to render it feasible enough to stand on its own two feet, without the need for government intervention, in the event a foreign strategic partner is not found.

The plan is slated to be completed by March 2018 and will address all aspects of the airline's operations including the rationalization of its network, fleet downsizing, seating reconfiguration, and contract renegotiations. Salary cuts are likely to be achieved through a renegotiated Collective Labour Agreement (CLA) although talks concerning this objective will only take place after the March completion date.