SriLankan Airlines Seeks Potential Gulf Buyers, Expansion
Originally published on Airways
According to Sri Lankan Airlines (UL) Chief Executive Officer Richard Nuttal, the airline should be targeted by Gulf-based airlines such as Emirates (EK) and Indian carrier Air India (AI) once they are privatized. This comes as the airline announced that it had achieved an operating profit for the first time in 15 years. One of Nuttal’s main selling points for acquiring Sir Lankan Airlines is that it could substantially benefit from the airline’s easy access to its neighbor.
Among the contenders for acquiring the Sri Lankan flag carrier is EK, which previously held a 40% stake in the airline for ten years. In 2010, EK sold its 44% stake in the airline for US$53 million in a buyback effort by UL.
Emirates suffered a loss of almost US$20 million on its original purchase value. Almost 14 years later, EK could enter the market as the Sri Lankan government looks to privatize the airline. In 2008, the last year EK owned a stake in UL, the airline made a profit of just US$30 million. Over the next eight years, the airline lost US$875 million under the government’s ownership.
Mr. Nutall clarified that he could not speculate on the intentions of EK or other potential bidders. He stated that the government will look to see who is interested within the next few months in the hope of an expedited process.
The pandemic and the collapse in tourism have severely impacted UL. This culminated with last year’s financial uproar and the 2019 Sri Lanka Easter bombings, which took the lives of 269 people and injured hundreds of others. Even with all of these obstacles, UL could make an operating profit.
Mr. Nutall, who has worked for eight airlines, stated that further augmenting income is possible, especially with the airline’s plan to expand its fleet from 23 aircraft to 40 within three to five years.
SriLankan Expansion
Even though India is the most populated country with 1.4 billion people, the commercial aircraft count is just 0.5 per million people, while the United States has thirty aircraft. Even with the record aircraft purchase by Air India, it will take five years until they start taking delivery of those aircraft.
The airline’s proximity to India and its understanding of its culture make an alliance a great fit. UL currently serves 14 destinations in India. Moreover, its location would allow a Gulf airline to use a large hub in southern Asia for flights to Australia, Southeast Asia, and China.