SriLankan Airlines: Searching for serendipity
Described by local media as an attempt to “marry off an unattractive bride with no dowry”, it might also be added that government-owned Sri Lankan Airlines’ as the ‘bride-to-be’, has its fare share of wrinkles and bulges – in all the wrong places.
August 17, 2016
The Sri Lankan government’s recent request for Expressions of Interests (EOI) from third parties interested in forming a strategic partnership with its loss-making carriers Sri Lankan Airlines and/or Mihin Lanka, for a badly needed restructuring, solicited only a handful of proposals. The deadline for submissions is 24 August with a decision due by late September. The advertisement itself was a curious understatement, titled as it was an, “invitation for expression of interest for the reorientation of SriLankan Airlines and Mihin Lanka.” The exact stake that will be up for sale in this ‘reorientation’ is unclear, although analysts have suggested it could be around 40 per cent.
Of the potential suitors, China’s HNA Group has been touted as a potential frontrunner in the Sri Lankan government’s quest to find a suitable strategic partner for the carrier. State sources told the Daily Mirror that the Chinese conglomerate’s interest was proffered through its Hainan Airlines unit. Earlier this year, the government said it was considering an equity buy-in from another airline and possible aircraft order cancellations to stem ongoing losses at the national carrier and this was followed by some network cuts. This isn’t the first time Sri Lankan has sought outside help as Emirates acquired a 40 per cent stake in SriLankan for US$70 million in 1998 and increased its shareholding to 43.6 per cent, with the government holding a 51 per cent majority. But the relationship between the partners soured in 2008, triggering a government buy-back in 2010. The Emirates-appointed CEO of SriLankan was subsequently removed from his post by then strongman President of Sri Lanka, Mahinda Rajapaksa and replaced him with his own brother-in-law, who had no airline or corporate experience. SriLankan like many airlines around the world, has been facing intensive competition, especially from Gulf carriers, but it has signed what it described as new, “promising” codeshare agreements with Etihad Airways and Qatar Airways. By end of the year SriLankan plans to connect to Frankfurt and Paris via Abu Dhabi and Doha.