State funded SriLankan Airlines faces more uncertainty after preferred bidder for a public-private collaboration, Texas Pacific Group (TPG) pulled out of talks.
The government had been willing to offload a 49% stake in the airline to reduce the financial burden to taxpayers, but TPG cited likely poor returns on any investment.
"After completing the due diligence process, regrettably TPG have informed us they will not pursue a potential investment in SriLankan Airlines," Ajith Dias, chairman of the carrier said in an internal memo, Reuters reported.
"It is their opinion that allocating the human and financial resources to make the airline profitable will not realise sufficient returns, compared to the many other investment opportunities that are available to them,"
TPG was considered the best of three shortlisted firms bidding for a stake.
The airline has suffered since Emirates sold its stake in 2008 and has been forced to cancel an order for new aircraft and cut unprofitable routes.
According to the Sri Lanka Sunday Times, it may go back to the UAE carrier seeking help again.
"They are looking to Emirates again, as well as Air Asia and Qatar Airways," a source said.
