The Sri Lankan government has made the decision to absorb 50% of the debt owed by SriLankan Airlines in order to attract potential investors and facilitate the restructuring of the national carrier, which has struggled to find a buyer.
Aviation Minister Nimal Siripala de Silva announced today that the State Property Restructuring Unit has received a letter from the International Finance Corporation (IFC), highlighting the challenge posed by the airline’s substantial debt of US$1.2 billion in attracting suitable investors.
President Ranil Wickremesinghe, also the Finance Minister, presented a cabinet memorandum emphasizing the urgent need to restructure the aviation service while ensuring the job security of approximately 6000 employees in the sector.
The government has agreed to absorb several debts owed by SriLankan Airlines, including:
– $210 million owed to Bank of Lanka and People’s Bank
– $68.2 million overdraft at Bank of Lanka
– A $175 billion international bond
– Treasury guarantee for Rs. 31.4 billion in international bonds
This action is expected to reduce the airline’s total debt burden by approximately 50%.
Minister de Silva outlined that the government aims to complete the restructuring process within six months. Additionally, he mentioned plans to generate revenue through food services and land handling, as well as an expected increase in revenue from the airline’s fare structure.
Furthermore, the minister announced an extension of the tender period for the restructuring of SriLankan Airlines by an additional 45 days from today (05).
