SriLankan Airlines govt guaranteed debt draw US$3bn in orders

June 30, 2014 (LBO) - A 175 million US dollar debt offer by state-run SriLankan Airlines drew orders worth 3.0 billion US dollars from 85 parties, the carrier and book runner Standard Chartered Bank said.

Sri Lankan Chief Executive Kapila Chandrasena said international investors had shown interest in the airline and it showed the confidence placed on the country by them.
The airline sold the 5-year bonds at 5.3 percent, with an explicit government guarantee, 175 basis points higher than the 5.125 percent the government itself paid for a 500 million US dollar sovereign bond in April.

Dushan Casie Chetty, Director, Head Local & Global Corporates, Standard Chartered said it was price at only 50 basis points higher than the current 'fair value' of 5-year sovereign bonds.

"This sets a new benchmark for Sri Lankan issuers and has paved the way for other entities to tap the international capital markets," Colin Pawley, Head of Corporate and Institutional Clients, Standard Chartered said.

The government however has been unwilling to guarantee debt of other issuers, encouraging them to go to the market on the strength of their own balance sheet.

The funds will be used for working capital and re-fleeting. SriLankan Airlines is making losses.
Yasantha Dissanayake, Head of Finance of SriLankan Airlines said the response to the debt issue was encouraging and it opened new sources of financing for the airlines for refleeting and modernization.

http://www.lankabusinessonline.com/news/srilankan-airlines-govt-guaranteed-debt-draw-us$3bn-in-orders/6637419

All that is good, but what is the plan to revive ? More loans, losses every year ...??

Something is wrong with the management.

I think the issue lies not with the management's ability to manage but its inability to ignore political interferrance, not only with procurement contracts but also in day-to-day running of the business. See the number of overseas free trips by politicos. Even the worlds best managers will not be able to resurrect the airline with such a mess.

The biggest problem is that the airlines are so old that it is no longer fuel efficient.

Airbuses are like old Volvos and it's hurting the entire industry