Six firms have progressed to the next stage in the process to acquire a majority stake in SriLankan Airlines, as confirmed by Sri Lanka’s State Owned Enterprises Restructuring Unit (SRU), an arm of the Ministry of Finance. Among the entities moving forward is a company closely linked to AirAsia (AK, Kuala Lumpur International), highlighting the diverse interest in the national carrier.
The SRU’s announcement follows the closure of the Request for Qualification (RfQ) submission deadline on April 22, 2024. The firms advancing include an AirAsia-affiliated entity, local low-cost carrier FitsAir, Dharshaan Elite Investment Holding Ltd., Sherisha Technologies Ltd. from India, Sri Lankan conglomerate Hayleys PLC, and Treasure Republic Guardians Ltd.
Notably, AirAsia Consulting Sdn. Bhd., a consultancy division of the AirAsia Aviation Group, is the only participant with direct ties to a major airline. FitsAir, a smaller player in Sri Lanka’s aviation market, operates three A320-200s and services four destinations. Hayleys PLC, a well-established conglomerate, has extensive interests in various sectors, including aviation.
The involvement of newer entities such as Treasure Republic Guardians Limited and Dharshaan Elite Investment Holding, both likely investment vehicles, along with Sherisha Technologies, known for its focus on renewable energy solutions, underscores the wide range of business interests eyeing the airline.
This bidding process was initiated in October 2023 when the Sri Lankan government, which holds a 99.52% stake in the airline, called for potential investors as part of its plan to privatize the carrier. Despite rumors of interest from major global airlines like Emirates and Etihad, the RfQ phase saw none of these entities submit qualifications.
The SRU has outlined that moving forward in the RfQ does not guarantee final bidding rights. Each entity must meet specific technical, legal, and financial benchmarks as set by the Special Guidelines on Divestiture of State-Owned Enterprises established in July 2023.
Additionally, financial considerations are significant as the Sri Lankan government plans to absorb LKR100 billion rupees (USD332.6 million) of the airline’s debt, though a USD175 million bond due in June 2024 will remain on the airline’s books. Success in an ongoing arbitration case against Airbus could also financially benefit the government.
The culmination of the divestiture process is aimed for September 2024, marking a critical phase in the restructuring and privatization of SriLankan Airlines as the government seeks to improve the carrier’s financial health and operational efficiency.
