By The Sunday Morning Business Desk
Attempts to restructure over a $ 400 million debt owed by national carrier SriLankan Airlines to the two main state banks, Bank of Ceylon (BOC) and People’s Bank, have not been successful yet, according to the Airlines’ Chairman Ashok Pathirage.
Responding to a query by The Sunday Morning Business, Pathirage noted that the airline and the banks are still in discussions.
When asked what was holding back the restructuring of this debt, he said: “Nothing is holding the restructuring back. Banks are still doing it. We are expecting a good outcome.”
SriLankan owes about $ 220 million to BOC while to People’s it owes about $ 187 million. It is learnt that interest is being paid on time while the capital payments are being dragged on for years. In addition to this, SriLankan’s fuel bill to Ceylon Petroleum Corporation (CPC) stands at $ 275 million.
These long-standing debts to state banks are hindering SriLankan’s development plans while on the other hand, state lenders too are facing difficulties when loans that are unlikely to be serviced in the near term occupy their loan books.
Considering this, SriLankan had made a request from the two state banks to restructure its debt to them and to arrive at a mutual agreement. Therefore, they can convert their short-term debts to the banks into long-term debts with a grace period where they could service the capital payments too.
In mid-June, Pathirage stated that the debt restructuring with the state banks received approval from the Cabinet of Ministers.
Following the closure of the Bandaranaike International Airport (BIA) on 18 March, SriLankan Airlines had to remain on the ground apart from few cargo flights. Few days after, SriLankan began operating rescue flights that brought in stranded Sri Lankans from around the world. In addition to this, SriLankan operated rescue flights for several other countries, bringing their nationals back home.
Pathirage stated that SriLankan’s future plan is dependent on when the BIA will open up for tourists. He added that upon the reopening of the BIA and other regional airports, SriLankan would plan its routes.
SriLankan has been a loss-making airline for over 10 years. The airline recorded a loss of Rs. 40 billion in the financial year (FY) 2017/18, the highest annual loss since Emirates’ departure from its management in 2008.
During a Committee on Public Enterprises (COPE) meeting in February this year, Pathirage disclosed that SriLankan was estimated to lose about $ 130 million by March 2020. He also added that if everything goes well and no external issues, such as Covid-19, disrupt the airline’s operations, they are aiming at bringing the losses down to about $ 30 million next year.
SriLankan Airlines’ monthly CPC bill alone is about $ 14 million, with only $ 6 million out of it being paid monthly before the local Covid-19 outbreak.
Attempts to restructure over a $ 400 million debt owed by national carrier SriLankan Airlines to the two main state banks, Bank of Ceylon (BOC) and People’s Bank, have not been successful yet, according to the Airlines’ Chairman Ashok Pathirage.
Responding to a query by The Sunday Morning Business, Pathirage noted that the airline and the banks are still in discussions.
When asked what was holding back the restructuring of this debt, he said: “Nothing is holding the restructuring back. Banks are still doing it. We are expecting a good outcome.”
SriLankan owes about $ 220 million to BOC while to People’s it owes about $ 187 million. It is learnt that interest is being paid on time while the capital payments are being dragged on for years. In addition to this, SriLankan’s fuel bill to Ceylon Petroleum Corporation (CPC) stands at $ 275 million.
These long-standing debts to state banks are hindering SriLankan’s development plans while on the other hand, state lenders too are facing difficulties when loans that are unlikely to be serviced in the near term occupy their loan books.
Considering this, SriLankan had made a request from the two state banks to restructure its debt to them and to arrive at a mutual agreement. Therefore, they can convert their short-term debts to the banks into long-term debts with a grace period where they could service the capital payments too.
In mid-June, Pathirage stated that the debt restructuring with the state banks received approval from the Cabinet of Ministers.
Following the closure of the Bandaranaike International Airport (BIA) on 18 March, SriLankan Airlines had to remain on the ground apart from few cargo flights. Few days after, SriLankan began operating rescue flights that brought in stranded Sri Lankans from around the world. In addition to this, SriLankan operated rescue flights for several other countries, bringing their nationals back home.
Pathirage stated that SriLankan’s future plan is dependent on when the BIA will open up for tourists. He added that upon the reopening of the BIA and other regional airports, SriLankan would plan its routes.
SriLankan has been a loss-making airline for over 10 years. The airline recorded a loss of Rs. 40 billion in the financial year (FY) 2017/18, the highest annual loss since Emirates’ departure from its management in 2008.
During a Committee on Public Enterprises (COPE) meeting in February this year, Pathirage disclosed that SriLankan was estimated to lose about $ 130 million by March 2020. He also added that if everything goes well and no external issues, such as Covid-19, disrupt the airline’s operations, they are aiming at bringing the losses down to about $ 30 million next year.
SriLankan Airlines’ monthly CPC bill alone is about $ 14 million, with only $ 6 million out of it being paid monthly before the local Covid-19 outbreak.