Bidders for SriLankan Airlines Get More Time
- Govt. extends deadline for submission of Request for Qualification by a month till 9 January
- National carrier in FY23 posts best ever financial performance in over one and a half decades
- Flew 11.8 m passengers in FY23 up from 5 m during COVID-hit FY22
- Achieves operating profit of Rs. 43 b in FY23 and cuts net loss by over 50% to Rs. 71 b
- Suffers exchange loss of Rs. 63.1 b and finance cost of Rs. 51.5 b in FY23
- Total borrowings at Rs. 389 b and accumulated losses top Rs. 600 b mark
Prospective bidders for the losses and debt-saddled SriLankan Airlines will have more time with the Government extending the deadline for Request for Qualification (RfQ) to 9 January next year.
The previous deadline was 5 December 2023 and the extension was following requests for more time by interested parties.
As per the SOE Restructuring Unit (SRU), the RfQ process for the sale of a majority stake in SriLankan Airlines will be in February next year and bid submission is slated for April and issuance of Letter of Intent in May. World Bank Group’s International Finance Corporation is the lead advisor and IFC experts from Singapore, Thailand, Spain and Pakistan are involved.
The prospective bidders must prove that it satisfies the Technical, Financial and Legal Qualification Criteria to participate in the bidding process.
The Government intends to sell SriLankan Airlines as a whole, including the profitable catering unit. The Government is also in the process of restructuring and/or removing debts/liabilities of the national carrier.
Overall liabilities of SriLankan Group crossed the Rs. 700 billion mark to Rs. 705.6 billion in FY23 from Rs. 609 billion in the previous year.
As at 31 March 2023, SriLankan had accumulated losses of Rs. 601.7 billion as against Rs. 529 billion a year ago. Its long-term interest bearing liabilities amounted to Rs. 154 billion, down from Rs. 215.6 billion. Short term borrowing was Rs. 234.5 billion, up from Rs. 164 billion in FY22. Group Assets grew to Rs. 211 billion from Rs. 182 billion.
As per the last audited accounts (FY23) released in October, SriLankan Airlines reported a group loss of Rs. 71.3 billion, down from Rs. 163.5 billion in FY22. However, excluding foreign exchange loss, the group posted an operating profit of Rs. 43.3 billion as against Rs. 1.6 billion in FY22. Exchange loss was Rs. 63.1 billion and the finance cost amounted to Rs. 51.5 billion.
Group revenue grew nearly three-fold to Rs. 369.4 billion with 23 aircrafts in its fleet. The cargo services segment, contributing approximately 14% to SriLankan Airline’s (SLA) income, generated a revenue of Rs. 51 billion in FY23.
The airline carried 11.8 million passengers in FY23 up from 5 million during COVID-hit FY22. Passenger load factor was 77.65% up from 49%. It has a route network of 126 destinations in 61 countries. The network of international destinations served by SLA has expanded from 37 destinations in 2019 to 39 in 2023. It has extensive landing rights in many Indian cities. Male, Chennai, London and Singapore are the largest destinations served, contributing to a combined 25% of the airline’s seats.
SriLankan Airlines Chairman Ashok Pathirage said the airline recorded satisfactory profitability for the first time in a decade and a half.
He said SLA’s prudent resource optimisation efforts and efficiency improvements, coupled with a more favourable macroeconomic environment that bolstered tourism and air travel in the latter part of the year, played pivotal roles in achieving this progress.
As per SRU, prequalified bidders will be given the opportunity to conduct due diligence on SLA at the RFP stage.
According to the RfQ notice, prospective bidders other than a financial institution must have a minimum Net Worth of at least $ 200 million or its equivalent and provide evidence that it has the capability to raise loans of at least $ 100 million or its equivalent for the proposed transaction.
If a prospective bidder is a Financial Institution, it must provide evidence that it has the available investible funds/capital of at least $ 300 million or its equivalent. Bidders also need to fulfil KYC Standard to the satisfaction of the Sri Lankan Government.
Among advantages of Sri Lankan Airlines are it being the sole ground handler at Colombo airports (expected to generate $ 60 million in revenue), and exclusive flight catering provider in Sri Lanka (expected to generate $ 40 million in revenue).
Group also includes Sri Lankan Engineering, fully fledged EASA 145 accredited Maintenance Repair and Overhaul (MRO) arm offering aircraft line, heavy and component maintenance services to over 30 international airlines and Sri Lankan Aviation College; is EASA 147 accredited and offers a suite of internationally recognised operational, customer service and management training courses for local and international students.
(Source: Daily Mirror)