SriLankan seeks funds as govt. finalizes restructuring plan
Dhaka: The Sri Lankan government is preparing a restructuring plan for the national carrier SriLankan Airlines, expected to be finalized within weeks before being submitted for Cabinet approval, Deputy Minister of Ports and Civil Aviation Janitha Ruwan Kodithuwakku has said.
The development comes as SriLankan Airlines has requested an additional LKR 10 billion in Treasury support to address mounting cash flow pressures threatening day-to-day operations.
The airline reported a loss of LKR 2.73 billion for the financial year ending March 31, 2025, reversing a profit of LKR 7.9 billion recorded the previous year.
Kodithuwakku attributed the financial strain partly to rising fuel costs following the Israel-US war against Iran. "Our operational expenditure has increased slightly; fuel costs have doubled," he said, adding that the government was closely monitoring the situation as prices may ease in the future.
He clarified that the government had not yet released the requested funds.
The airline currently operates without a chairman or executive director. Minister of Ports and Civil Aviation Anura Karunathilaka said the interview process for a new CEO was underway and a candidate had already been proposed for the chairman position.
Briefing Parliament separately, Karunathilaka revealed that LKR 91.3 billion in loans obtained from state banks had been restructured. Under the arrangement, the government injects capital into the airline to facilitate repayments twice annually, in April and October.
The restructuring of a USD 175 million international sovereign bond guarantee is currently underway and expected to conclude by the end of 2026. The airline's total outstanding liabilities currently stand at USD 993.78 million.
Beyond immediate financial support, the ministry is drafting a broader roadmap to modernize the airline's management structure. Kodithuwakku said the airline had operated under the same institutional framework since its inception and required a fundamental shift in direction.
He stressed the initial phase focused on institutional reform and efficiency. "We are planning to restructure SriLankan Airlines and are moving this towards a more scientific, new business model," he said.
The government is also considering a Public-Private Partnership model to ensure long-term sustainability, though no final policy direction has been confirmed.
Sri Lanka recently concluded its combined Fifth and Sixth Reviews under the IMF Extended Fund Facility, unlocking approximately USD 695 million in fresh financing. The country's economy grew 5% in 2025, with official reserves rising to USD 7 billion.
The IMF has repeatedly emphasized the importance of restoring the financial viability of state-owned enterprises, particularly SriLankan Airlines. The government, however, has provided written assurances of continued financial support while indicating it does not intend to maintain the airline indefinitely in its present form.
