Sri Lanka seeks higher bids for ailing airline

 A flight deck director signals to a newly-ordered Sri Lankan Airlines A320neo plane at Bandaranaike International Airport in Katunayake - Reuters/Dinuka Liyanawatte

• Debt-ridden airline to sell maximum 49%, seeks partner
• Earlier bids not enough: Finance Minister
• TPG, BlackRock Inc among the earlier bidders

 Reuters: Sri Lanka is seeking higher bids to restructure its State-owned loss-making airline, the Finance Minister said on Monday, after three shortlisted firms failed to give “sizable” bids.

Sri Lanka wants to sell up to 49% of the national carrier along with management control, part of a move by the Government to reduce support for State-owned firms and cut debt.

Finance Minister Ravi Karunanayake said on Monday the Government had not decided on the bids yet as they were below expectations.

“We will be calling more broad-based interest. The current bids are not enough and not sizable,” the Minister told Reuters.

However, he did not say if the Government would look for new bidders or discuss with the existing bidders.

Senior Government officials have said private equity firm TPG, Sri Lanka-based Peace Air and a Maldivian company had been shortlisted from about nine bids including from fund company BlackRock Inc.

The Government called for bids in July and had expected to award the restructuring process by end last year.

The national carrier is struggling with colossal debt and decided to sell four new Airbus A350s after cancelling an order for four of the aircraft. It has also stopped some loss-making destinations to the Europe.

Subsequent mismanagement left the airline saddled with debt of around $ 3.25 billion, according to Prime Minister Ranil Wickremesinghe.

SriLankan Airlines has attractive routes to India and analysts have said potential investors could be drawn to the prospect of turning around the carrier, which has about 21 leased Airbus planes.

On Monday, it commenced the induction of the first of six narrow-bodied short-haul aircraft, the A320neo, to strengthen its operation in Asia and the Middle East.

The airline reported a net loss of Rs. 16.33 billion for the year to 31 March, narrower than its Rs. 31.4 billion loss a year earlier on lower oil prices. It last made a profit in 2009, a year after Emirates sold its stake.