Selling SriLankan Airlines tough task for new premier

Bloomberg

Sri Lanka’s new Prime Minister Ranil Wickremesinghe wants to sell the national airline, saying the country’s poorest people who’ve never flown shouldn’t be saddled with its losses. Finding a buyer might not be easy.
SriLankan Airlines Ltd, which prior to the pandemic serviced 126 destinations in more than 60 countries, lost $125 million in the year through March 2021, Wickremesinghe said, less than a week into his job.
Sri Lanka had bought back a stake in the carrier, betting on a resurgent travel industry after the end of its 26-year civil war, but the airline has been marred in controversy, including scandals.
“I don’t expect much interest from airlines,” said Brendan Sobie, Singapore-based founder of consultancy Sobie Aviation. “Many of the airlines that made overseas investments in prior years have shifted their strategies and are no longer eager to acquire airlines in other markets. SriLankan also isn’t that attractive given its history and the challenges it still faces.”
The attempt to sell the airline comes with Sri Lanka on the verge of defaulting on two unpaid foreign bonds. High inflation has led to widespread public anger and violence, prompting the former prime minister to
resign.
Wickremesinghe said he had to print money to pay government salaries, which will pressure the local currency.
SriLankan’s predicament carries risks for aircraft-leasing firms, including Air Lease Corp and Avolon Holdings Ltd, analysts at Bloomberg Intelligence wrote in a report last month.
While the size of the Sri Lankan aviation market isn’t close to Russia’s, where lessors face writedowns of billions of dollars, the crisis could exacerbate their problems, analysts including Adrian Sim wrote.
Sri Lanka has previously failed to find a buyer for the debt-laden airline. In 2018, the country revived a process of privatising the carrier after talks with TPG Capital collapsed following due diligence of the airline.
Sri Lanka’s allure in part is down to its proximity to India, from where travellers are increasingly taking stops in Colombo to either visit the island or the neighbouring Maldives and Seychelles.
India’s largest conglomerate Tata Group, which recently bought formerly state-run Air India Ltd, and European carriers such as Deutsche Lufthansa AG, Air France-KLM or Turkish Airlines could be interested in buying SriLankan, according to Mark Martin, founder of Dubai-based Martin Consulting LLC.