Sri Lankan Airlines less attractive without catering, ground handling: analysts

Jan 07, 2008 (LBO) – Sri Lankan Airlines is not an attractive opportunity for potential investors unless it comes with ground handling and catering, as airline operations alone were not very profitable, analysts said.

(US$1=SLR 108.30)

The Bloomberg newswire quoting presidential secretary Lalith Weeratunga said a committee may be set up to look into options after the Emirates’ “unilateral decision” to exit the airline.

Emirates chief Tim Clark said Sunday that he was looking for 150 million dollars for its 43.6 percent stake in SriLankan Airlines, but investors who have been sniffing around the airline say that it is somewhat ‘expensive’.

“At 150 million dollars for Emirates stake, you are valuing the airline at around 350 million dollars,” a potential investor who declined to be identified told LBO.

“That is expensive. If ground handling and catering is not part of the deal it is not attractive at all. Potential buyers would also need to know whether they are getting a management contract or not.”

Critics of the existing deal have previously criticized the bundling of ground handling and catering services with the airline.

All or nothing?

By end March 2007, the c