The Sri Lankan government will pay Sri Lankan Airlines (UL, Colombo International) 109.9 billion rupees (US$335.8 million) to repay its debt and clean up its balance sheet ahead of its partial privatization.
Colombo’s Sunday Times reported that the Ministry of Finance will soon submit a supplementary budget to Parliament for approval. The funding is part of a broader fiscal policy that the ministry is seeking approval for the partial privatization of several state-owned enterprises (SOEs). At least some of the funds are likely to be returned to the government through the settlement of debts owed to other state-owned enterprises, such as the Ceylon Petroleum Corporation.
The government has urged interested parties to bid for a majority stake in SriLankan Airlines, saying it represents an “excellent opportunity to deliver profitable growth in the hands of the right investor to build a major hub in the Indian Ocean.” A formal call for pre-qualification was made.
Sri Lanka’s total debt is approximately $1.2 billion. However, the majority of these debts are likely to be removed from the airline’s balance sheet before the government sells its planned 51% stake. The International Finance Corporation (IFC), a member of the World Bank Group, is advising the government on the sale.
For the 12 months ended March 31, 2023, Sri Lanka had a local currency loss of 75.03 billion Sri Lankan Rupees (US$232 million) on revenue of 365.17 billion Sri Lankan Rupees (US$1.13 billion). was accounted for. However, this loss was due to the depreciation of the LKR currency and the impact on USD-denominated debt. Managed accounts in Sri Lanka are paid in US dollars as revenues and expenses are primarily paid in foreign currencies. The airline’s U.S. dollar balance is at breakeven or slightly positive.
Since 2015, SriLankan Airlines has posted an operating loss of $575 million.