By: Staff Writer
November 17, Colombo (LNW): The government of People’s Power, under President Anura Kumara Dissanayake, has decided not to sell or divest SriLankan Airlines but retain ownership, in contrast to what the previous administration had planned for the financially troubled airline.
This decision comes after a notable shift was seen, as the airline showed signs of returning to profitability this year, according to an official statement.
The previous administration initiated the privatization process of the national carrier through the State-Owned Enterprises Restructuring Unit, with an express intention to divest some its ownership.
Former Cabinet later discarded the privatization plan and opted to consider other models for divestment.
But the current government is keen to retain SriLankan Airlines within the state-controlled system, Prof. Anil Jayantha, Chairman of the NPP Economic Council, said, owing to its non-replaceable role in developing tourism.
It has been placed beyond any full or partial sale and is emphasizing more on perfecting the management through a new internal model.
By that time, the previous Cabinet had already moved to absorb US$510 million of the airline’s debt, in order to sweeten it for private investors.
The government was planning to sell at least 51 percent of the state-owned enterprise. SLA has long faced financial difficulties, rooted in legacy operational problems and costs associated with past debt.
In the recent past, SLA has been receiving periodic financial support provided by the General Treasury through equity injections and loan guarantees, among other forms. In the first half of 2024, the government approved a Rs. 5 billion equity contribution to support the continued cash flow difficulties.
Despite the hard financial environment, SLA has recorded a total revenue of Rs. 63.8 billion in Q1 of the financial year 2024/25, which depicts a decline of 12.7% from Rs. 73.1 billion recorded during the same period of 2023/24.
Excluding finance charges and exchange differences, SLA recorded a pre-tax profit of Rs. 0.6 billion during the period, down considerably from the Rs. 8.0 billion profit seen during the first quarter of 2023/24.
However, when finance charges and exchange differences were included, the SLA Group had revealed a net loss of Rs 12.9 billion in the three months ending in 2024/25 from a net profit of Rs 25.8 billion a year ago.
In March 2024, the Cabinet of Ministers approved treasury-guaranteed debts of USD 210 million and Rs 31.4 billion (approximately USD 100 million) to be taken off the books of SriLankan Airlines onto the Government’s balance sheet, reducing the airline’s debt burden.
The NPP government’s decision to retain SriLankan Airlines in the hands of the state will be a strategic one for tourism strengthening, with long-term stability of the airline and an internal restructuring process in view of its financial improvement.
