KUALA LUMPUR: Capital A Bhd, through wholly-owned subsidiary AirAsia Consulting Sdn Bhd, has emerged as one of six bidders for purchasing shares in Sri Lanka's national airline.
A statement from Sri Lanka's Ministry of Finance, Economic Stabilisation and National Policies also identified Dharshaan Elite Investment Holding (Pvt) Ltd, FITS Aviation (Private)
Ltd, Sherisha Technologies Private Ltd, Treasure Republic Guardians Ltd and local conglomerate Hayleys PLC as the other bidders.
The deadline for submissions to take over SriLankan Airlines Ltd (SAL) was Monday.
An initial background check by MIDF Research revealed that SAL currently operates a fleet of 24 Airbus A320 and A330 aircraft, serving a network of 126 destinations across 61 countries.
The airline is facing challenges, with three aircraft grounded for over a year due to insufficient funds to cover mandatory engine overhauls, the firm said.
"SAL holds a dominant position at Bandaranaike International Airport, the primary international airport in Sri Lanka, commanding a 52 per cent market share.
"Before the pandemic, SAL transported about five million passengers and
100,000 tonnes of cargo, operating around 15,000 flights annually," MIDF Research said today.
Its major destinations, including Male, Chennai, London and Singapore, collectively accounted for 25 per cent of the airline's total seat capacity.
The firm said SAL was in a profitable state until its management contract with Emirates was abruptly ended in 2008, due to a disagreement with then-president Mahinda Rajapaksa.
Sri Lanka's commitment to privatise SAL, as pledged by then-prime minister Wickremesinghe in May 2022, aimed to relieve the state of the burden of restructuring the airline, particularly in addressing its substantial legacy debt servicing costs.
This initiative sought to shift the responsibility to private investors rather than relying on public finances.
In the previous month, Minister of Ports, Shipping and Aviation Nimal Siripala de Silva announced that the government
plans to absorb over a quarter of SAL's reported US$2.0 billion in accumulated losses, as per its latest audited year in March 2023.
This move aimed to enhance the airline's appeal to potential investors.
Additionally, the government decided to inject US$60.0 million-US$70.0 million into SAL over the next six months to ensure its financial stability and safeguard the jobs of its 6,000 employees until the privatisation process is completed.
"We believe the (Capital A) group sees this acquisition as part of its corporate strategy, as it continually seeks opportunities to enter new emerging markets with growing populations and rising middle-income groups.
"Management has previously hinted at the potential establishment of two more regional airlines in addition to its ventures in Cambodia," MIDF Research said.
It added that through the acquisition, Capital A can establish connections between major and secondary cities in India and various points in Southeast Asia.
However, further details on the potential acquisition are scarce at this juncture, with the process to review the proposals from the bidders expected to take about four months.