‘Will have to ground SriLankan Airlines, if no buyer for joint venture’ – Aviation Minister

Minister of Ports, Shipping and Aviation Nimal Siripala de Silva says that the government will have to ground state-owned national carrier SriLankan Airlines, if there is no buyer to enter into a joint venture with the government.

Responding to the allegations of staff shortages, salary and debt issues within the airline, during Ada Derana’s “State of the Nation” programme, the Aviation Minister refuted the allegations of staff shortages and declared that SriLankan Airlines has the necessary number of staff for running an airline, according to the international norms.

“Allegations that we don’t have the necessary staff for operating the airline are not correct. According to the international norms and the practicality of running an airline, we have the necessary number”.

The minister further explaining the exact figures highlighted that, “in 2019 we had 311 pilots and we operated 26 aircraft and in 2020 we had 339 pilots and we operated 05 aircraft as it was the Covid-19 pandemic period. In 2021, we operated 13 aircraft with 293 pilots. That was of course a part of the Covid-19 period. In 2022, we had 295 pilots and we operated 19 aircraft”.

“As of now, in 2023, we are operating only 15 aircraft with 273 pilots, and as of June 01, 2023, according to the figures, we were operating 16 aircraft and we had 262 pilots”, the Minister added.

Minister de Silva claimed that in comparison to these figures, it is very clear that the number of pilots for the number of aircraft that SriLankan Airlines are flying is quite enough.

“Therefore, the allegation that we don’t have the necessary number of pilots is wrong”.

The Minister also commented regarding the Engineering staff, pointing out that “In the same way, with the same Engineering staff, we have operated more aircraft during 2019. So, why can’t they do it now?”

“But that is not the fact. The fact is something else. It is because of trade union actions. Pilots refuse to fly during their off days and the engineers also went on a go-slow campaign”, he expressed.

However, the minister alleged that those actions are also the cause for the downfall of the airline, which was making a profit in the last few years.

Meanwhile, the minister was also inquired regarding certain reports alleging that the government is planning to sell off SriLankan Airlines by the end of 2024.

In response, Minister de Silva denied these claims, emphasizing that it not possible under Sri Lankan law, while adding that that if the airline is sold, it will lose landing rights in many important destinations.

“We are not going to sell. We can’t sell the airline in terms of the Sri Lankan law. Then we will lose our landing rights in many important destinations”.

“So what we’re going to do is we want to retain 51% with us and to divest 49% of the shares of SriLankan Airlines, so that it will be a joint venture”, he said.

“Around 08 months ago, I carried a Cabinet paper and requested the Cabinet to approve such a divesture. Reaching into an agreement, a joint venture and we’ll run this airline because we’re in debt.”

Speaking further in this regard, the Minister said, “we have a debt of USD 1.2 billion. That is to the international market we have taken about USD 175 million from the sovereign bonds and about another USD 100 million we owe to the lessors of the aircraft because we don’t own a single aircraft”.

“All these aircraft have been leased out from the lessors”.

The Minister further stated that SriLankan Airlines owes money to even the Airport and Aviation Authority, and to the Ceylon Petroleum Corporation (CPC) for the jet fuel they have used. 

“Therefore we can’t run this airline because we need a capital injection here.  We have to put at least USD 500 million capital to make this airline a viable airline. The government has no money to do that and the government does not intend to do that, because we feel the correct policy is to go into a joint venture and get the necessary capital and ensure that the airline is run smoothly.”

“That is the formula we have at the moment”, he said, adding that “we have not yet called for Expression of Interest (EOI) from the buyers or from anybody who wants to come and invest here. But there are a lot of inquiries from us, but we can’t negotiate with them because now the Treasury is the owner of the airline. It is a Treasury-owned company.”

The Minister said that when he presented the Cabinet paper, the Cabinet thought it prudent to refer it to the Treasury and the Treasury has taken the view, in consultation with the World Bank and the IMF, to appoint an independent transaction advisor.

That advisor has been selected by the World Bank and that advisor is working on that. But I am pressing on him and Mr. Suresh Shah, who is in charge of this privatization process. So, I told him that ‘I can’t wait anymore. I need this joint venture to be done soon’.”

 Nimal Siripala de Silva said that he has been promised that they will get all the papers ready by the end of this month, and will publish it in international media, “so that anybody interested can apply and we will appoint necessary committees and we will get the best proposal”.

He added: “Till the airline goes into a joint venture as we have envisaged, we have to run this airline. So for that purpose, we need to get some more aircraft. But have advertised to get some more aircraft”.

However, the Aviation Minister emphasized that it is very difficult to obtain Airbus A330 aircraft at present, as there’s a shortage in the market.

“Therefore we are being affected by this international situation also”, he added.

Minister de Silva also stated that the Chairman and Board of Directors of the airline are trying their best to make this a viable business venture, for which the government need the cooperation of trade unions, pilots, engineers, cabin crews and all others.

“If they don’t cooperate, it’s not the government that will suffer. They will suffer because we will not be able to go on the venture we have proposed”.

“So if there is no taker, then we will have to ground this aircraft at some time or other”, he added.

“Therefore, I always appeal to the trade unions and workers to be cautious and cooperate with us till we embark upon this process”.