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SriLankan Airlines
- IATA/ICAO Code:
- UL/ALK
- Airline Type:
- Full Service Carrier
- Year Founded:
- 1972
- Alliance:
- oneworld
- CEO:
- Richard Nuttall
- Country:
- Sri Lanka
In a televised address to the Sri Lankan public, Prime Minister Ranil Wickremesinghe has announced a government proposal to privatize the country’s flag carrier to reduce debt and generate funds for the economy.
Economic woes
Wickremesinghe emphasized significant losses by SriLankan Airlines between 2020 and 2021 as the primary reason for its privatization, incurring a loss of Rs 45 billion (USD$123 million) in the financial year ending March 2021, ballooning to Rs 372 billion (USD$1 billion) in the year since.
“Even if we privatize Sri Lankan Airlines, this is a loss that we must bear,” Wickremesinghe noted. “You must be aware that this is a loss that must be borne even by the poor people of this country who have never stepped on an airplane.”
Sri Lanka is currently in the throes of a severe economic crisis, seeing its foreign reserves reduce by over 70% through the pandemic, reaching a low of USD$1.93 billion in the financial year ending March 2022.
Recently re-appointed Wickremesinghe is already moving to privatize significant chunks of government-funded sectors. Plans are in place to replace the previously approved infrastructure development budget with a “special relief” order to provide citizens with basic necessities and curb the country’s inflation rate.
During his previous tenure as Prime Minister, Wickremesinghe unsuccessfully tried to sell off the airline. Through his time in opposition, he has consistently fought for its privatization in parliament, recently criticizing the Chairman of the Committee of Public Enterprise (COPE), Professor Charitha Herath, for failing to control the airline’s finances.
Government scrutiny
SriLankan has come under fire from politicians for its planned expansion and fleet renewal despite economic difficulties. Earlier this year, the carrier posted four proposals for a wide range of aircraft types, including Airbus A330 and A350 widebodies and regional Airbus A220s.
Following a COPE parliamentary meeting in April, the airline announced it would be going ahead with its fleet renewal with plans to lease up to 21 aircraft to support its long-term growth strategy starting late 2022. However, it is unclear what the future of these plans is following Wickremesinghe's recent announcement.
Airline bosses have remained resolute that despite two years of financial losses, its latest Q1 posting has seen it return to the green with a profit of USD$1.7 million, its highest since 2006.
With a rapidly improving aviation industry, SriLankan has already started preparations for a busy summer season, doubling flights to nearby India and increasing capacity on services across South Asia and Oceania.
State Minister of Aviation and Export Zones Development, D.V.Chanka, defended the airline’s decision, noting that SriLankan did not use government money to sustain its operations and had already downsized its fleet, reducing costs by USD$25 million. Chanka added that the procurement process would take at least a year and a half and would not use government money for the leases.
What do you think of the Sri Lankan government’s decision to privatize its flag carrier? Let us know in the comments.
Sources: Bloomberg, The Independent, Economy Next