SriLankan Airlines has been struggling financially for a long time, but the situation has gotten worse in the past several years, given Sri Lanka’s economic issues. Everything is pointing to the oneworld airline nearly being grounded, but we’ll see how it plays out…
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SriLankan Airlines needs to be privatized
In May 2022, plans were announced for SriLankan Airlines to be privatized. The government owned airline had been losing money for years and was continuing to rack up debt. For some amount of time the government could sustain those losses, as a way of providing connectivity to the country, and transporting inbound tourists.
However, Sri Lanka has had a serious economic crisis that started in 2019, and which has only gotten worse. It’s the country’s worst economic crisis since it gained independence, in 1948. Sri Lanka has been bailed out by the International Monetary Fund (IMF), a move that came after the country had record low reserves, leading to significant inflation and currency depreciation.
One of the government’s biggest money losing enterprises is SriLankan Airlines, so the government has invited bids from companies to privatize the airline. The current deadline for interested parties to submit proposals is March 5, 2024.
However, that’s not looking so good, as Nimal Siripala de Silva, Sri Lanka’s Minister of Ports, Shipping and Aviation, has just issued an alarming warning:
“Deadline given to potential investors for submitting expressions to partner the national carrier ends on March 5. The information we have received as of now is that all those who have already expressed interest are planning to withdraw after the Sunday’s flight delay. We will have no option but to ground SriLankan airlines for good in this situation.”
For some background, there’s outrage in Sri Lanka, after four SriLankan Airlines flights were delayed on Sunday. Two flights were delayed because rats were found on the aircraft, while two other flights were delayed due to technical issues. Those problems were made worse by 15 ground handling staff being absent that day — three had applied for leave, while 12 just didn’t show up.
Now, admittedly withdrawing interest in acquiring an airline due to a bad day of delays seems like an overreaction. However, this has been a recurring issue at SriLankan Airlines, as the carrier has struggled to operate reliably.
Furthermore, SriLankan Airlines’ situation is dire — the government can’t keep supporting the airline, especially with the bailout it has received, so something needs to change. And that raises another question…
Who could even acquire SriLankan Airlines?
Most savvy entrepreneurs probably aren’t lining up to invest in any airline, let alone an airline in Sri Lanka with a bunch of debt and endless legacy issues.
So I have to imagine that any investment in SriLankan Airlines would be part of a larger strategy, and perhaps even be about soft political power. For example, in the late 1990s, Emirates owned a stake in SriLankan Airlines’ predecessor, and that was logical enough.
However, I think most Gulf carriers have gotten a little savvier since then — Etihad is no longer pursuing its strategy of lighting money on fire by exclusively investing in airlines that are sure to liquidate, Qatar Airways is conservative with the airlines it invests in, and this isn’t something that’s part of Emirates’ strategy anymore.
There had been some speculation that maybe Tata Group, which also recently acquired Air India, might be interested. However, that even seems like a long shot.
Bottom line
SriLankan Airlines is in a rough financial spot. The government owned airline needs to be privatized, and the deadline for that happening is March 5, 2024. Now one of the country’s ministers has stated that any interest that existed in privatizing the airline has been withdrawn.
It’s anyone’s guess how this plays out, but things aren’t looking good for SriLankan Airlines.
How do you see this SriLankan Airlines situation playing out?
@Antwerp - I loved Ella as a "pristine" wonderland in 2017, what has become of it?
Instagram swings, DJ enclaves with pool parties at the base of Little Ella, zip lines running from the hills, lines of 2000 people converging on the hikes, cheap backpacker guest houses lining every road, Chinese tour busses blocking the roads, tuk tuk rental agencies, raves, trash everywhere, touts lining every trail, new construction building anything possible in what little space there is. Need I say more?
I can see where it was beautiful some...
Instagram swings, DJ enclaves with pool parties at the base of Little Ella, zip lines running from the hills, lines of 2000 people converging on the hikes, cheap backpacker guest houses lining every road, Chinese tour busses blocking the roads, tuk tuk rental agencies, raves, trash everywhere, touts lining every trail, new construction building anything possible in what little space there is. Need I say more?
I can see where it was beautiful some years ago, truly majestic even now if you squint your eyes. But it has been ruined. The good news…still plenty of beautiful pristine areas left in Sri Lanka. I’m a kitesurfer and spent a month on the northwest coast in January that is fantastic, beautiful and authentic. The north east coast appears the same and will explore that area a bit more in August. There is hope. And I genuinely love the country.
The quality of service and products has dropped drastically. We flew on UL in December of last year from Delhi to Colombo. The state of the aircraft interiors was terrible. The breakfast was dismal and despite traveling in business class, passengers had to ask for the drinks selection. It was evident that the cabin crew were not interested in providing service. Upon landing, we were surprised to see two Aeroflot aircraft and a massive group...
The quality of service and products has dropped drastically. We flew on UL in December of last year from Delhi to Colombo. The state of the aircraft interiors was terrible. The breakfast was dismal and despite traveling in business class, passengers had to ask for the drinks selection. It was evident that the cabin crew were not interested in providing service. Upon landing, we were surprised to see two Aeroflot aircraft and a massive group of Russian tourists. I guess the travel ban has narrowed their options for international travels significantly. Aside from this, the country and the people remain charming and worth a visit.
It is a decent airline too.
Their lounges may not be good, but the product in their wide bodies is nice enough.
We received an upgrade from Y to J earlier this year from CMB to KUL thanks to my Oneworld Sapphire Via AA.
I flew Sri Lankan back in December and was pleasantly surprised by the quality of the airline. Good media, good seats, friendly staff, decent food. It was late (both coming to Kathmandu and leaving for Malaysia), but a friend told me that it was just "island time."
The airport was decent and the people were quite nice and friendly. An hour long Uber into Colombo 1 was $17.
I wonder what will happen now.
Sri Lankan needs to be privatized but this page said Aerolinas Argentinas privatization plan is an "absolutely absurd plan" despite receiving billions from the Argentine Government in the last decade, money which they loaned externally is just ridiculous.
Not a surprise, one of the worst airlines I've ever flown, right up (down?) there with China Eastern for poor service, late and cancelled flights and inedible meals. Not Aeroflot bad, but not much better.
My country of origin is Sri Lanka. It is a beautiful country as a former British colony, being fluent in English is a MUST in the private industries. And as such, the hospitality industry is outstanding with most hoteliers and chefs having got their training in the Middle East.
However, as is with former Air India and all government owned airlines, the beaurocrats are political appointees who are not competent, lack any work ethic,...
My country of origin is Sri Lanka. It is a beautiful country as a former British colony, being fluent in English is a MUST in the private industries. And as such, the hospitality industry is outstanding with most hoteliers and chefs having got their training in the Middle East.
However, as is with former Air India and all government owned airlines, the beaurocrats are political appointees who are not competent, lack any work ethic, lack leadership and only in the job for prestige and travel perks. This corruption as been pervasive at Sri Lankan Airlines so it is no surprise that there is no loyalty or striving for excellence from top management to ground handlers.
For countries like Pakistan, Sri Lanka, Malaysia, Indonesia, Nepal.... there should be a conglomerate type approach where an effective leader devoid of any political influence can run local airlines with their country flags (like in China where there is a parent company and subsidiaries for each region) so there isn't top heavy overhead and there would be leverage in operating costs, contracts for airline acquisitions (strictly through leases).
Slightly OT but Sri Lanka related: https://www.nbcnews.com/news/world/sri-lanka-russia-ukraine-whites-only-party-fuels-outrage-rcna140640
Russians (primarily) are all over the south coast. It’s incredible how many are there now. And flights coming in every day, including the only international flight to serve the new airport in the south coming from Moscow Oblast…a 777 no less almost daily. Must be very empty for the return. Based on what I saw a couple of weeks ago this is not exactly the income level or demographic Sri Lanka needs. It’s a rough...
Russians (primarily) are all over the south coast. It’s incredible how many are there now. And flights coming in every day, including the only international flight to serve the new airport in the south coming from Moscow Oblast…a 777 no less almost daily. Must be very empty for the return. Based on what I saw a couple of weeks ago this is not exactly the income level or demographic Sri Lanka needs. It’s a rough looking group that resembles more a stadium full of hooligans. Sri Lanka has all the potential and has made great inroads to become a true premium destination…but this could ruin it all. They have already turned two areas into circuses around Tangalle and Ella (which used to be beautiful and pristine).
I flew them two weeks ago and they were even more of an operational mess than you’ve seen before. Any irrops and the whole system (pretty much done with phone and paper) crashes down until one guy behind a curtain (literally) issues you new boarding passes after waiting for hours.
They may very well be on the verge of collapse, just when people were starting to discover the joys of this wonderful country. I...
I flew them two weeks ago and they were even more of an operational mess than you’ve seen before. Any irrops and the whole system (pretty much done with phone and paper) crashes down until one guy behind a curtain (literally) issues you new boarding passes after waiting for hours.
They may very well be on the verge of collapse, just when people were starting to discover the joys of this wonderful country. I say this as I noticed an uptick in fares from Europe and the US to CMB for a trip back this summer. Up 30% on many of the flights with QR, EY, and EK. I was wondering why. This could be it, a circling of wagons around the possibility of losing Sri Lankan.
But then I heard recently that they had started turning around and were in the verge of a profit. So the demise is surprising if true.
I should add that they are having a really difficult time getting pilots. They are losing pilots to the ME 3 faster than they can train new ones. A Swiss friend used to fly for them on contract (now flies for Edelweiss) and says they can’t even recruit foreign pilots anymore either. This has been a huge struggle for Sri Lankan for a few years and why many flights get canceled.
A bit OT, but Sri Lanka is a truly wonderful country to visit. Can’t recommend it enough! (I was most recently there in December of -23, and have another trip coming up this fall.)
Pakistan is also being forced to privatize PIA due to the terms and conditions of the bailout loan they got from the IMF. I wonder who will buy PIA.
I also wonder who has a better chance of survival, PIA or Sri Lankan. Pakistan has a more stable aviation market than Sri Lanka, but Sri Lankan has a newer fleet.
The joke used to be that UL = Usually Late.
Guess it’s not really a joke.
I visited Sri Lanka in late 2018. A beautiful, clean and hospitable country. I had the best meal in my life eating a dinner buffet at the hotel in a tropical environment designed by Sri Lanka's best known architect Geoffrey Bawa. We hired Tangerine Travel tour guide for nine nights. Sri Lanka's economy tanked in 2019 when it defaulted on a Chinese loan and lost an important strategic port in Colombo. The corrupted dynasty was...
I visited Sri Lanka in late 2018. A beautiful, clean and hospitable country. I had the best meal in my life eating a dinner buffet at the hotel in a tropical environment designed by Sri Lanka's best known architect Geoffrey Bawa. We hired Tangerine Travel tour guide for nine nights. Sri Lanka's economy tanked in 2019 when it defaulted on a Chinese loan and lost an important strategic port in Colombo. The corrupted dynasty was overthrown and its economy did not recover from it, compounded by Covid shutdown. I highly recommend visiting Sri Lanka.
The Luluganga is beautiful! My wife and I also managed to find a three night stay at the Desharam House, also designed by Bawa. We loved our visit to Sri Lanka, especially our serene stay in the tea estates within Nuwara Eliya.
@thetransitguy and others on Instagram probably love it as they are anti-car and anti-plane. They only like HSR and subways and dense buildings
I like planes but the Transit Guy on instagram is great in highlighting how the US - with notable exceptions - can be really bad at simple public transport measures Like some people seem to be almost viscerally against public transit in the US. I think because to some it seems like the opposite for freedom, despite the fact public transit gives many people a freedom to travel they wouldn’t normally have. Did you see...
I like planes but the Transit Guy on instagram is great in highlighting how the US - with notable exceptions - can be really bad at simple public transport measures Like some people seem to be almost viscerally against public transit in the US. I think because to some it seems like the opposite for freedom, despite the fact public transit gives many people a freedom to travel they wouldn’t normally have. Did you see the Transit Guy’s repost of how efficiently Sydney got thousands of people away from the Taylor Swift concerts by trains arriving every few minutes at the stadium? It was great.
CX already issued a statement saying that they’ll stay in Oneworld. I think it’s actually more likely that CA will join Oneworld.
Star already has Eva SQ ANA and Thai in the region I don’t think any of these airlines would be thrilled to have CX in. CA is never too invested in S* partnerships anyway, so this actually makes sense.
Between this and rumors that CX will leave OW to join *A having more merit, due to CA considering increasing its shares, not a good time to be a OW loyalist in Asia…
Since you mention "lighting money on fire", I'm guessing a suitor could be Saudi, which is already in midst of awesome things like the Line! All the Sri Lankan gov't or airline official has to do is praise MBS like crazy and it might actually happen!
I'd suggest you avoid any Saudi consulate especially in Turkey.
Options for using Qantas points to get to Europe further diminishing if they go under, routes via KL and Colombo will go. Will be almost nothing left.
Not helped by an Australian YouTuber who published his experience recently where by the aircraft had to return to the airport after burning smells were detected in the rear of the cabin, on landing his PR machine kicked in and low and behold he was being interviewed live on the local news network.
So what was burning?
The YouTuber pants are on fire?
Let this be a warning to other airlines to only go bankrupt when James Hogan is CEO of another airline
A helpful article. I am considering some flights on UL early next year, but this gives me pause. They still owe me AS miles from flights in January. So does MH.
"Emirates used to own a stake in a predecessor to the airline"
I guess you have a picture quota to maintain, but it might have been more interesting to have included a picture of that airline instead of one of Emirates.
OneWorld is taking it on the chin w/ weak Asian partners outside JAL compounded by the decline of Hong Kong and Cathay Pacific (especially with the rumors of a potential acquisition by Air China).
While Qatar helps a bit for South Asia (and perhaps getting China Southern on board can somewhat offset Cathay), it just makes it hard to find feed for American in Asia - it would probably help American to add IndiGo in...
OneWorld is taking it on the chin w/ weak Asian partners outside JAL compounded by the decline of Hong Kong and Cathay Pacific (especially with the rumors of a potential acquisition by Air China).
While Qatar helps a bit for South Asia (and perhaps getting China Southern on board can somewhat offset Cathay), it just makes it hard to find feed for American in Asia - it would probably help American to add IndiGo in South Asia who they already partner w/ as IndiGo focuses on expanding internationally.
Delta has the same issue b/c SkyTeam is similarly weak w/ just Korean Air and China Eastern - maybe Etihad joins or Vietnam Airlines or Garuda can gain scale but it makes it tough to expand to compete vs the local carriers.
Compare that to Star Alliance where United has a ton of strong partners: Singapore Airlines, ANA, Air China and Air India (both of which are anticipated to really grow), Turkish, Thai, and a partnership w/ Emirates, it just makes it that much easier since they've basically covered all the major markets.
And what has your exhausting, long-winded reply got to do with SriLankan on the verge of collapse...?
Sri Lanka is the only OneWorld Alliance airline in South Asia...
That’s coming from someone who has access to and primarily chooses to fly Star Alliance. Ask those down under whether they concur with you.
...do China Airlines, Vietnam Airlines, and Garuda know about that??
Is just throwing names supposed to mean something?
Garuda is reducing its fleet by 50% after declaring bankruptcy and has fallen very far behind Lion Air - they're not even in the top 50 airlines in fleet size anymore and have half the incoming orders of Lion Air.
Vietnam is not a large aviation market (Saigon has less capacity than Manila and Kuala Lumpur in SE Asia) and Vietnam Airlines has only slightly more capacity...
Is just throwing names supposed to mean something?
Garuda is reducing its fleet by 50% after declaring bankruptcy and has fallen very far behind Lion Air - they're not even in the top 50 airlines in fleet size anymore and have half the incoming orders of Lion Air.
Vietnam is not a large aviation market (Saigon has less capacity than Manila and Kuala Lumpur in SE Asia) and Vietnam Airlines has only slightly more capacity than VietJet (https://www.cirium.com/thoughtcloud/aviation-analytics-on-the-fly-asia-pacific-largest-airlines/) with neither having a strong international footprint and barely in the top 50 fleet sizes.
EVA Air had ~10% higher revenue than China Airlines in 2023 (https://focustaiwan.tw/business/202401110005) with bigger plane orders on docket, but neither are in the top 50 in fleet size anyways.
So yes, SkyTeam sans Korean Air is weak in Asia.