In a recent move by the Sri Lankan government, the prequalification deadline for acquiring a majority stake in SriLankan Airlines, the national carrier, has been pushed to March 5, 2024. This adjustment marks the third extension from the initial deadline set in early December 2023, signaling a significant shift in the sale’s timeline. The Ministry of Finance, without providing explicit reasons, announced these changes in a bid bulletin update on January 30.
The revised schedule indicates that the selection of prequalified bidders and the opening of the data room are now planned for mid-March. This will be followed by the issuance of the Request for Proposal (RFP) and draft definitive agreements by the end of March. The new timeline accommodates one-on-one meetings with bidders and site visits throughout April, with the final submission of bids and selection of the successful bidder anticipated in May. The subsequent steps, including the issuance of a letter of intent, cabinet approval, and signing of agreements, are slated for June.
This strategic divestiture is part of the Sri Lankan government’s broader initiative to improve the national balance sheet and transition the management of predominantly commercial state-owned enterprises to the private sector. Currently, the government holds a 99.52% stake in SriLankan Airlines but is looking to sell a majority share to a strategic investor. Highlighting the potential for profitable growth, the government has previously touted the sale as an opportunity to transform the airline into a major hub in the Indian Ocean region.
Echoing the government’s optimism, SriLankan Airlines’ CEO Richard Nuttall emphasized the significant commercial opportunity for the airline, despite acknowledging challenges related to the country’s political and economic landscape. He revealed insights into the sale process, noting that initial expressions of interest drew attention from non-airline entities, both domestic and international, indicating a varied interest in the airline’s future.
Amidst these developments, SriLankan Airlines is actively seeking to expand its market share, particularly in India, which currently represents 20% of its revenue. The airline aims to increase this figure to 25% by March 2025 and plans to add Ahmedabad to its extensive network of destinations. However, Nuttall highlighted operational challenges, such as supply chain issues and difficulties in sourcing replacement aircraft and engines, which pose significant barriers to growth.
SriLankan Airlines boasts a diverse fleet of 26 aircraft, serving 37 airports across 21 countries. The current fleet composition includes a mix of Airbus models, with a notable portion out of service due to maintenance and supply chain constraints. This situation underscores the airline’s challenges in maintaining and expanding its operations amid the ongoing sale process and broader industry difficulties.
