Government has infused Rs. 5 billion worth of equity to the national carrier SriLankan Airlines to relieve the working capital issues in the first four months of 2024, mid-year fiscal statement said.
Accordingly, in order to safeguard the airlines, the Government offered assistance by issuing a Rs. 5 billion equity contribution to support the airline's ongoing cash flow problems in the first four months of 2024.
“Despite the challenging external and internal funding constraints, SriLankan Airlines has earned a total revenue of Rs. 333.6 billion in the fiscal year 2023/24, a decrease of 8.6% compared to Rs. 365.2 billion in 2022/23,” the Finance Ministry said.
However, SriLankan Airlines recorded a profit before tax of Rs. 7.3 billion in 2023/24, compared to Rs. 73.3 billion loss recorded in 2022/23 mainly due to converting the exchange loss of Rs. 25.6 billion in 2022/23 to an exchange gain of Rs. 0.5 billion in 2023/24.
The report said that the impact of the financial constraints of SriLankan Airlines has clearly manifested in the disruptions to operations evident over the recent past while the Government's fiscal constraints make it infeasible to continue to inject equity capital into the airline to ensure its continuity.
“In this particular situation, the Government decided to divest SriLankan Airlines in order to facilitate a new funding infusion from investors and help the airline's finances become sustainable again,” Treasury said.
The responsibility for providing transaction advisory on the airline divestiture has been given to the International Finance Corporation (IFC). The call for bids, or requests for qualifications, was released in October 2023 but had to be extended several times and ended on 22 April 2024.
The report said that considering the difficulty of attracting investors with the debt burden of airlines, the Government decided to transfer $ 310 million worth of local loans guaranteed by the General Treasury to the Government.
“With this, six Request for Qualifications (RFQs) that were submitted by bidders are now being reviewed,” the report said.