The Sri Lankan government has taken decisive steps to restructure the national carrier, Sri Lankan Airlines, including a decision to absorb half of its debt burden.
Aviation Minister Nimal Siripala De Silva announced today that the restructuring unit had received a letter from the International Finance Corporation (IFC) indicating that attracting competitive offers or reputable airlines to take over the airline’s management is unlikely due to its staggering USD 1.2 billion debt.
He said that President Ranil Wickremesinghe, who also serves as the Finance Minister, submitted a Cabinet memorandum yesterday, emphasizing the urgent need for restructuring while ensuring the job security of the airline’s 6,000 employees.
According to the Minister, President Wickremesinghe has agreed to take over the following debts owed by Sri Lankan Airlines:
– 210 million USD owed to the Bank of Ceylon & People’s Bank
– 68.2 million USD overdraft at the Bank of Ceylon
– International bond of 175 billion USD
– International bond of Rs. 31.4 billion, backed by a treasury guarantee and letter of comfort
With these actions, the airline’s balance sheet will witness a reduction of approximately 50% in its total debt, said the Minister, while noting that the treasury has already absorbed Rs. 102 billion in debt owed to the Ceylon Petroleum Corporation.
The government aims to complete the restructuring process within six months.
“Government is expecting this process to be completed within a period of six months and we will get money from the catering as well as from the ground handling and we are confident that we will be able to get more than 500 Million from fee structure in this airline,” said the Minister.
He also noted that the period to call for bids for the restructuring of SriLankan Airlines extended for 45 days with effect from today (5)
Sri Lankan Airlines, the flag carrier of Sri Lanka, has faced financial difficulties in recent years, which later prompted the government to include it in the SOE restructuring program.
Source: News 1st
