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Saturday, September 23, 2023

SriLankan Airlines Restructuring: Treasury to Bear Part of Debt Burden, says Minister

The SriLankan Airlines, which has been struggling with a heavy debt burden, is undergoing a restructuring process, according to Ports, Shipping and Aviation Services Minister Nimal Siripala De Silva. However, he has warned that even after the restructuring, the Treasury will have to bear a part of the airline’s debt.

In a recent address to Parliament, the Minister disclosed that the total debt of SriLankan Airlines is USD 1.2 billion. The restructuring process is expected to raise about USD 500 million by handing over the ground handling services, and SriLankan Catering is also considered to have some value. Despite these efforts, the Minister acknowledged that the Treasury will still have to bear a significant portion of the debt.

Restructuring Plan and Financial Advisory Group

The Minister further elaborated on the restructuring plan and stated that the Financial Advisory group Lazard was working with international guidance to prepare the expression of interest. This would help Sri Lanka get the maximum benefits from the restructuring process.

The Minister’s first priority in the restructuring process is to ensure job security for SriLankan Airlines employees. He emphasized that any changes to the workforce would be carried out with sensitivity and fairness.

Impact on the Treasury

The SriLankan Airlines’ debt burden has been a longstanding issue for the country’s Treasury. The government has been struggling to find a viable solution to the issue, with several efforts made in the past to restructure the airline. The current restructuring process, though seemingly promising, may still put a significant strain on the Treasury.

The Minister’s admission that the Treasury will have to bear a part of the debt burden indicates that the restructuring plan may not be enough to clear the airline’s total debt. This could have an impact on the country’s fiscal situation, and the government may need to consider other measures to address the issue.

Job Security for Employees

The restructuring process could potentially result in job losses, and the Minister’s reassurance of job security for employees is significant. The aviation industry has been one of the hardest hit by the COVID-19 pandemic, and the SriLankan Airlines’ financial struggles have only compounded the challenges for its employees.

It is essential that the restructuring process be carried out with sensitivity and fairness towards the workforce. The Minister’s commitment to this cause is commendable, and the government must ensure that the employees’ rights are protected throughout the process.

The restructuring of SriLankan Airlines is a crucial issue for the country, and the Minister’s update on the process is significant. However, the admission that the Treasury will still have to bear a part of the debt burden is a cause for concern. It is important that the government takes measures to address the fiscal impact of the restructuring plan, while also ensuring job security for the airline’s employees. The international guidance from Financial Advisory group Lazard is promising, and the government must leverage this opportunity to ensure the best possible outcome for the airline and the country.

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