SriLankan Catering, Ground Handling to a foreign investment company

By Chaturanga Samarawickrama

While restructuring SriLankan Airlines and its subsidiary companies, the government has decided to sell 49% shares and administration of SriLankan Catering and also 49% shares and administration in SrLankan Airlines’ Ground Handling to a foreign investment company.

Addressing the media, Ports, Shipping and Aviation Minister Nimal Siripala de Silva said the remaining 51% shares are currently with the Sri Lankan government. However, it is proposed to utilize the money that will be obtained by restructuring SriLankan Catering Limited and ‘Ground Handling’ to settle the creditors of Sri Lankan Airlines.   It is to incorporate a separate company as a subsidiary of Sri Lankan Airlines for the ‘Ground Handling’ division with the respective assets and staff involved in ‘Ground Handling’. 

Upon such incorporation, 49% shares of the SriLankan Airlines and its management to be transferred to a competent investor chosen through a transparent procurement procedure.

If the restructuring could be completed successfully, foreign debts of US$175 million and the Bank Overdraft obtained from the Bank of Ceylon for US$80 million could be repaid as Priority Payments.  Further to that US$ 80 million, the arrears amount due on Aircraft leasing could be paid and then, there won’t be any foreign debts to be paid.  When US$ 312 million, the arrears payments to Ceylon Petroleum Corporation (CPC) is settled, the CPC will also turn out to be a financially stable institution. 

Therefore we believe SriLankan Airlines, its debtors and its employees could only be protected through above restructuring process. SriLankan Airlines does not have the financial viability to repay the mortgages and loans it has obtained as the operation of the airline was severely affected for the past few years.