Rs. 91.3 Bn Debt Restructured: What’s Next for SriLankan Airlines?

COLOMBO (News 1st); Minister of Ports and Civil Aviation Anura Karunathilaka today (6) briefed Parliament on the current status of the SriLankan Airlines restructuring process, revealing that the restructuring of Rs. 91.3 billion in loans obtained from state banks has now been completed.

Responding to a question raised by an opposition MP, the Minister said an agreement has been reached between the Treasury, the Banking Directorate and SriLankan Airlines on a structured repayment mechanism.

Under this framework, the Government of Sri Lanka continues to inject capital into the airline every year to enable repayments to state banks, with contributions made twice annually in April and October.

He further said the restructuring of an international sovereign bond guarantee amounting to USD 175 million is currently underway and is expected to be completed by the end of 2026.

Minister Karunathilaka also referred to observations made by the Auditor General, who has questioned whether the national carrier can continue as a profitable business in the future. In response, the Minister said the Cabinet and the Treasury Secretary have already given assurance, confirmed in writing, that the government will continue to provide the financial support required for SriLankan Airlines to operate.

However, he stressed that the government does not intend to maintain the airline in its current form indefinitely. Instead, discussions have already begun at ministerial and Treasury levels on determining a suitable future business model, with support from potential investors. Options under consideration include a public-private partnership, a management contract, or continued full state ownership.

The Minister disclosed that SriLankan Airlines’ total outstanding liabilities stand at USD 993.78 million. While acknowledging that some improvement has been achieved in the airline’s financial position, he said it has not yet reached a fully profitable level.

During the exchange, MP Ravi Karunanayake of the New Democratic Front noted that SriLankan Airlines is part of discussions with the International Monetary Fund and said commercialization is necessary.

Minister Karunathilaka responded that there is currently no conflict between the airline’s restructuring process and the IMF programme.