SriLankan to be Sold to SIA ?

A report on a trusted Sri Lankan newspaper, The Sunday Times, states that the island nation government is looking at selling a stake of SriLankan Airlines ( IATA:UL ) to Temasek Holdings, parent of Singapore Airlines ( SIA ).
SriLankan has constantly been losing cash ever since it ended the management contract with Emirates Airline. The Government of Sri Lanka recently bought out the 44% stake Emirates held in UL.
SIA was the airline which provided launch assistance to UL back in 1979, when it was known as Air Lanka.
SIA’s recent acquisitions and managements are largely considered unsuccessful, with Ansett Australia going into bankruptcy after an unsuccessful takeover bid by SIA ( while being fully owned by Air NZ, again partially owned by SIA ) and Virgin Atlantic – SIA’s European investment – suffering financially.

However, if this deal goes ahead, and UL gets under SIA management, it could well provide UL with the fleet renewal it has badly needed. SIA will be able to provide UL with some of the former’s older 777s with the needed expertise, and perhaps even some 787/A350 slots.
More info on SriLankan Airlines

Article Excerpt -
Lanka seeks Singapore funds to
bail out SriLankan Airlines

After aid and investment from
China and India, Sri Lanka is now
turning to Singapore’s biggest
investment arm, Temesek
Holdings, to bail out state entities
like SriLankan Airlines and the
Ceylon Electricity Board (CEB),
through equity investments,
official sources said.
They said a team including
External Affairs Minister G.L.
Peiris, Deputy Finance Minister
Sarath Amunugama and most
likely, Treasury Secretary P.B.
Jayasundera is due to fly to
Singapore later next week for
discussions with Temesek, one
of Asia’s biggest investment
firms, set up by former Prime
Minister Lee Kuan Yew as a
government-funded agency but
run independently.
Various options have been
looked at the running,
maintaining and funding of
SriLankan Airlines after it ended
its long relationship with
Emirates and bought back a 44%
stake held by Emirates for $53
million, taking full control of the
airline. While the airline has been
making operational profits, its
debt burden has risen even so,
after the Emirates stake buyout
through a consortium of banks
led by Bank of Ceylon which
holds the shares on behalf of the
government.
Finance Ministry sources said
there had been suggestions to
seek foreign expertise and
consultancy services to maintain
the airline and other institutions
with potential Temesek
involvement as a serious
funding option. There were
suggestions at one point to look
at Singapore Airlines as an
investment and management
partner, the sources said.
With the government strapped
for cash, particularly to sustain
huge loss-making entities like the
CEB, equity investment in
SriLankan Airlines is being
considered with the airline now
rolling out a new financial and
strategic restructuring under a
new business plan prepared by a
team from the airline and the
Treasury. SriLankan Airlines CEO
Manoj Gunawardene unavailable
for comment this week on the
Temesek plan, told the Sunday
Times last month that the airline
business plan also saw
stakeholders like hotels and
travel operators being consulted
to look at long term needs.