Jan 21, 2014 (LBO) – State-run SriLankan Airlines is seeking at least 275 million US dollars in foreign financing, a top official said as the airline is on track to acquire new Airbus aircraft. Sri Lanka’s state has promised a 500 million US dollar injection to the airline over five years to recapitalize the airline.
Chief executive officer Kapila Chandrasena says the airline had already received 225 million US dollars over two years but the airline needed ‘front ended’ financing for its business plan.
The government’s remaining financing commitment of 275 million US dollars could be converted to quicker cash through foreign financing, he said.
SriLankan has made losses and it has devised a business plan involving the acquisition of a fuel efficient Airbus A330 and A350 fleet in a bid to return to profitability.
“To execute the business plan in time we are looking at bridging options,” Chandrasena said.
“We have received 225 million of the 500 mn as Treasury bonds. We want to utilize the balance available in the time it is needed in the business.”
“So are we are going and raising debt as a bridging facility.”
Sri Lanka’s The Sunday Times newspaper said aviation minister Priyankara Jayaratne has sought approval from the Cabinet of Ministers to raise up to 325 million US dollars from a bond issue and syndicated loan with an additional 50 million US dollar Treasury guarantee.
A 275 million US dollar bond issue will be used to make advance payments for Airbus aircraft, the newspaper said.
Standard Chartered Bank is to syndicate another 150 million US dollar international loan with the guarantee and use 130 million US dollars to pay down an existing loan arranged by Dubai-based Mashreq Bank, the report said.
“We are talking to some international banks, investments houses in order to find what the most optimum mechanism is for Sri Lankan,” Chandrasena said without elaborating on details.
“On this we are encouraged that the markets are liquid. We are looking at the least cost option. Loans or any other instruments are considered.”