SriLankan remains open for partners for its catering & ground-handling units: Pathirage

• But says airline neither pursuing nor holding such talks at the moment
• Says restructuring programme embarked 2 years ago has resulted in saving US$ 100mn in costs per annum
• Aims to increase fleet of aircraft to 35 in the next 3 years from the existing 24

While SriLankan Airlines may not be looking for outside parties to divest in its core airline business partly or fully, the airline remains open for partnerships for its catering and ground handling businesses should the deals be attractive, according to a top official. 

SriLankan Airlines Chairman Ashok Pathirage speaking to Bloomberg Television on Tuesday said, while divestiture plans for its core airline business is not on the horizon, its restructuring is bringing in massive cost savings.  
“If you look at SriLankan Airlines, it’s not only the airline portion, we are also running the catering services as a separate company and also we are the exclusive ground handler. So, those are very profitable businesses for us,” Pathirage said. 

“So, obviously from our perspective, we definitely need to raise some money. And we probably would consider bringing a partner or selling a part of it, may be not for the airline but for catering or ground handling businesses,” he added. 

However, he said at present they are not pursuing any deals with anybody or even holding talks for that matter. 
There have been loud calls for either an outright sale or part sale of the national carrier to a private party to turn its financial fortunes, which went awry after an earlier partnership with Emirates airline was abruptly ended.
Pathirage said inviting or not inviting a new partner for the airline is solely up to its only shareholder, the Sri Lankan government.

However, he said the airline’s internal restructuring efforts to make it profitable embarked two years ago is saving approximately US$ 100 million per annum in costs as they are revisiting the leases entered into with the lessors and have cut down on excess staff. 

Pathirage said SriLankan had been paying higher lease costs compared to other airlines, which is a huge burden on the company’s finances. Further, the company is also looking at re-fleeting its planes while increasing its fleet of aircraft to 35 in the next three years from the existing 24, as it is eying to add more routes to its itinerary. As the airline industry is slowly recovering from the pandemic-induced challenges, the industry is met with another headwind from the surging fuel prices in the global market and SriLankan Airlines is of no exception.

The oil prices in the Brent futures exchange, the global benchmark for oil, topped US$ 90 dollars a barrel last week on rising tensions between Russia and Ukraine.  

According to available data, SriLankan Airlines had made a group profit of US$ 10.66 million in December 2021, marking its first profitable month since the pandemic began. It isn’t immediately clear if the profit is after tax or before tax.