Sri Lanka’s new government plans to sell its national airline to stem losses

Sri Lanka’s new government plans to sell its national airline to stem losses, part of efforts to stabilize the nation’s finances even as authorities are forced to print money to pay government salaries.

The new administration plans to privatize Sri Lankan Airlines, Prime Minister Ranil Wickremesinghe said in a televised address to the nation Monday. The carrier lost 45 billion rupees (USD 124 million) in the year ending March 2021, he said just days before the nation is set to formally default on foreign debt.

“It should not be that this loss has to be borne by the poorest of the poor who have not set foot in an aircraft,” Wickremesinghe said.

Sri Lanka’s new government plans to sell its national airline to stem losses

“The next couple of months will be the most difficult ones of our lives,” Wickremesinghe said. “We must immediately establish a national assembly or political body with the participation of all political parties to find solutions for the present crisis.”

The premier pledged to announce a new “relief” budget to replace President Gotabaya Rajapaksa’s “development” budget that helped stoke Asia’s fastest inflation rate.

The cabinet will propose that parliament increase the treasury bill issuance limit to 4 trillion rupees from 3 trillion rupees, Wickremesinghe said, forecasting a budget deficit of 13% of gross domestic product for the year ending December 2022.

Earlier this year, the carrier posted four proposals for a wide range of aircraft types, including Airbus A330 and A350 widebodies and regional Airbus A220s.

In 2010, the government in Colombo bought back a stake in Sri Lankan Airlines from Dubai’s Emirates. The national carrier, which has a fleet of 25 Airbus SE planes, flies to destinations in Europe, the Middle East as well as South and Southeast Asia, according to FlightRadar24.

During his previous tenure as Prime Minister, Wickremesinghe unsuccessfully tried to sell off the airline. Through his time in opposition, he has consistently fought for its privatization in parliament, recently criticizing the Chairman of the Committee of Public Enterprise (COPE), Professor Charitha Herath, for failing to control the airline’s finances.

Airline bosses have remained resolute that despite two years of financial losses, its latest Q1 posting has seen it return to the green with a profit of USD$1.7 million, its highest since 2006.

During his previous tenure as Prime Minister, Wickremesinghe unsuccessfully tried to sell off the airline.

With a rapidly improving aviation industry, SriLankan has already started preparations for a busy summer season, doubling flights to nearby India and increasing capacity on services across South Asia and Oceania.

State Minister of Aviation and Export Zones Development, D.V.Chanka, defended the airline’s decision, noting that SriLankan did not use government money to sustain its operations and had already downsized its fleet, reducing costs by USD 25 million. Chanka added that the procurement process would take at least a year and a half and would not use government money for the leases.

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