The Presidential Commission of Inquiry into SriLankan Airlines (UL, Colombo International) recommended partial privatisation of the airline and its subsidiaries, EconomyNext has reported.
The 12-member commission of experts suggested that the state should seek an investor, preferably a non-competing airline, to buy up to 49% of shares in the struggling and debt-ridden Sri Lankan flag carrier. Similar minority stakes in the carrier's ground handling, MRO, and catering units should be sold in order to raise cash for SriLankan Airlines.
The subsidiaries, as opposed to the airline, are profit-making.
The stakes in all companies could be sold to the same company but an option to find separate investors for the various companies is also on the table.
The state would retain a 51% stake in SriLankan Airlines, while the carrier itself would still own the majority stake in all three subsidiaries.
Minister of Finance Eran Wickramaratne said that the Commission also considered closing down the airline and establishing a new flag carrier using some of its assets. The option was deemed unviable financially and would require a new legal framework akin to Chapter 11. Contracting an external firm to manage the airline was also evaluated and, while the Commission found some merit to such a solution, it recommended against this move.
The Commission also suggested that the state should restructure the carrier's massive debt, amounting to some USD900 million, by assuming at least a large part of it. The proceeds from the partial privatisation of the airline and its subsidiaries could then be used to repay this debt.
Wickramaratne said that President Maithripala Sirisena agreed with the report and would likely implement its conclusions through new laws due to be adopted in early February.
