In September, Colombo issued a name for bids to promote SriLankan Airways, a key demand of the IMF when it supplied a bailout mortgage to the nation final yr. File. Picture credit score: Getty Photos
Sri Lanka has scrapped plans to promote its debt-ridden nationwide airline regardless of shortlisting three potential consumers, the federal government’s privatisation company stated on July 19.
In September, Colombo known as for bids to promote SriLankan Airways, a key demand of the IMF when it granted a bailout mortgage to the nation final yr.
Six corporations had initially expressed curiosity in taking a stake within the airline, which had money owed of greater than $2 billion on the finish of the 2022/23 monetary yr.
The federal government introduced a listing of three potential traders in April, together with Malaysia’s Air Asia.
Nevertheless, on Friday the State Enterprise Restructuring Unit stated it had known as off the sale.
“The Cupboard of Ministers at a gathering held on July 9 determined to terminate the present bidding course of with respect to the divestment of SriLankan Airways,” it stated in a short assertion with out giving any purpose for the choice.
He added that the federal government will pursue an “various technique” with regard to the provider.
The Worldwide Financial Fund had chosen Sri Lanka as a “restructured” nation when it granted the federal government a $2.9 billion bailout final yr.
The bailout got here after the nation defaulted on its $46 billion exterior debt in April 2022 because it confronted an unprecedented scarcity of overseas foreign money wanted for important imports.
With almost 6,000 staff, SriLankan Airways is the most important and most costly of the carriers affected by a money haemorrhage that’s draining the funds and exacerbating Sri Lanka’s financial woes.
Nevertheless, analysts had warned that discovering an organization prepared to take a position cash within the airline could be enormously tough, given its historical past of interference, mismanagement and turbulent partnerships.
In 1998, Emirates purchased a minority stake and took over its administration. Over the following decade, the corporate maintained its earnings, even in 2001, when a number of of the airline’s planes have been destroyed in an assault on the principle worldwide airport by Tamil Tiger separatists.
However the partnership was terminated and the chief government was fired by then-President Mahinda Rajapaksa in 2008 after the airline refused to divert fare-paying passengers to make room for his relations coming back from a visit to London.
Authorities tried to promote a 49% stake in SriLankan in 2017 when tourism was booming, however personal fairness agency TPG ultimately withdrew its supply after deciding it was not a viable deal.
