Govt.Looks For Airline Partners

  • Following failed bid…
  • Talks with Emirates on the cards

by Amavasya Sirisena

Minister Eran Wickramaratne and Minister Kabir Hashim

The government is to negotiate with international airlines to seek a partner for SriLankan Airlines after a top US firm withdrew from talks to purchase a stake in the loss-making state-carrier.

Deputy Minister of Public Enterprise Development, Eran Wickramaratne said that the government will have discussions with companies like Emirates which once operated SriLankan Airlines.

“Direct talking with international airline companies will take place probably over the next few weeks, since most of the companies have been in touch with us throughout,” said Wickramaratne to The Sunday Leader.

He said the government is now in the process of initiating direct talks with international airline companies after the credible contender and the best bidder out of the three shortlisted bidders, Texas Pacific Group (TPG) turned away after the due diligence.

“We followed a certain process where we advertised internationally for bidders and received eight expressions of interests. Out of those eight, three parties submitted their proposals subsequently,” he explained to The Sunday Leader in answering the question on the process they undertook in calling for bidders.

Amongst the three shortlisted bidders TPG was the most credible bidder who later decided that they won’t proceed further after conducting the due diligence.

“The reason for their refusal was that the investment that they would have to make in terms of resources and time will probably not commensurate with what they think the return is going to be. TPG, being a private equity fund, will obviously have alternative investments and they will be benchmarking each with the other. Therefore, along with the refusal of TPG for Public-Private Partnership (PPP), this process has come to an end now,” he further stressed.

TPG refused to comment on its decision to withdraw from talks to buy a 49 percent stake in state-owned SriLankan Airlines.

“TPG declines to comment,” a TPG spokesman told The Sunday Leader in response to an email.

The government called for bids in July and had expected to award the restructuring process by end 2016 but it said in February the bids from the three short-listed companies were too low.

“We could now go for the option of talking directly to the international airlines. We are now at a very preliminary stage,” Wickramaratne said.

Direct talks with international airlines will be done with an open sheet so that there will be investors, probably looking for strategic fit and management arrangements.

“Thus, we can’t have a definite plan till we talk to different parties,” Wickramaratne added.

He further stated the reason behind as to why the process of talking directly to international airline companies was not initiated and instead an open process was initiated was to stop all the accusations that will probably rise in the name of corruption.

“While we are re-structuring we will keep looking if there is any suitable partner,” he said.

When questioned on whether there are any specific airline companies that the government is looking for as a partner for SriLankan, he stated that there are no specific airlines.

“Thus already as you know, there are some obvious international companies that we will talk to. For instance like Emirates, who was there with us in the past,” he said.

Further explaining he said that the entire process of direct talks with the airlines is open and they will talk to them as the names come up. Those who are interested and want to invest will be prioritized during the direct talks.

The opposition had accused the government of attempting to privatise loss making government institutions, including SriLankan Airlines.

The government however insisted that a majority stake of SriLankan Airlines will not be sold.

Finance Minister Ravi Karunanayake said that more than 51 percent of the stake the government has on the national airline will not be sold.

In January Minister of Public Enterprise Development, Kabir Hashim said that action must be taken against some former and current SriLankan Airlines officials based on the J. C. Weliamuna Report on the national airline.

The Minister said that the Criminal Investigations Department is investigating some aspects of the Weliamuna Report.

Hashim said that while the airline was operating at a huge loss when the former government was in power, it is now seeing a reduction of those losses.

“We have taken steps to revive the airline. We are following the proper procedure to do this,” the Minister said.

The government had cancelled orders given by the previous administration for four new A-350 aircraft which were scheduled to be delivered this year.

In February SriLankan Airlines took delivery of its first A320neo on lease from Air Lease Corporation, making the airline the latest operator of the type. The delivery from Airbus’ facilities in Hamburg is the first of a fleet that’ll grow to six A320neo Family. SriLankan’s A320neo is configured for 150 passengers in a two-class cabin layout with 12 business class seats and 138 economy class seats. It is powered by CFM Leap1A engines. The carrier will deploy the aircraft on its expanding route network connecting Colombo with destinations in India, Middle East and Far East.

SriLankan Airlines and Airbus embarked upon a long term, strategic partnership in 1993 when the airline began operating the A320 and A340. It has since grown to be an all Airbus operator with a fleet of 24 Airbus aircraft. Meanwhile, SriLankan Airlines will begin flights between Melbourne and Colombo towards the end of this year, marking the airline’s long-awaited return to Australian skies.

A spokesperson for the Sri Lankan flag-carrier – which many years ago abandoned flights to both Sydney and Melbourne – indicated to Australian Business Traveller recently that the schedule would see four flights each week, using an Airbus A330 jet fitted with lie-flat business class seats to make the 11 hour journey.

This will be the only direct route from Australia to Sri Lanka – most travellers to the tiny island off the southern tip of India transit via Singapore, with onwards flights provided by SriLankan and Singapore Airlines.

3 Comments for “Govt.Looks For Airline Partners”

  1. janaka

    The Hambantota despot ruined the airline.

  2. TPG comments are not the only source of information on SriLankan Airlines. Just see the people on the top. What is its Chairman doing to look in to the affairs ofthe Airlines. CEO is worse than the Chairman. First of all it should be understood that he is not the CEO calibre. He was a pilot repeating the same process everyday in the cockpit throughout his life and he lacks a broader vision to act efficiently as the Chief Executive. Take the case of Chief of Commercial who is only fit to be a middle level or senior level manager. He could not survive in other foreign carriers for a longer periods. His monthly remuneration is supposed to be above Rs 4 m thanks to the ageing former secretary Finance who ran the country in Premadasa,s regime. Look for a world calls CEO and a person to head commercial division leaving aside all these political bump sucking. This airline can be salvaged in a short time probably in 2 to 3 years when the time is set for this government to go home.

  3. Thassim

    Why did you not report to Interpol and German police the company that filed FORGED bank documents to claim they had USD 5 Billion to buy SriLankan Airlines when they have not even owned a single helicopter rotor blade? Is it because of political connections to LATEC man who is big UNPer?

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