National carrier SriLankan Airlines has reported a Rs. 2.73 billion net loss for the financial year ending 31 March 2025, marking a stark reversal from the Rs. 7.9 billion profit recorded the previous year — a decline of 134.6% year-on-year.
Its annual report revealed that revenue for the year fell 10.8% to Rs. 303 billion, while operating expenditure dropped 11.7% to Rs. 276.3 billion, reflecting efforts to rein in costs amid operational and macroeconomic challenges. Total assets declined by 6.1% to Rs. 189.2 billion, while shareholders’ funds remained negative at Rs. 379.5 billion — a marginal improvement from the previous year’s Rs. 381.7 billion deficit.
Acting CEO and Group CFO Yasantha Dissanayake attributed the losses primarily to unscheduled engine repairs costing Rs. 2.2 billion and net finance charges of Rs. 31.6 billion. The airline’s passenger revenue dropped 15% YoY to Rs. 234.5 billion, due to capacity limitations, reduced global yields, and the impact of the appreciating Sri Lankan Rupee.
In contrast, the cargo segment grew 2% YoY, buoyed by a dynamic pricing strategy that adjusted to fluctuating demand, seasonal patterns, and targeted customer segments. “This approach allowed us to optimise revenue per kilogram of cargo transported, despite broader logistics disruptions,” Dissanayake noted.
Other revenue streams, including ground handling and ancillary services, rose 16% to Rs. 27.1 billion, reflecting a post-pandemic market recovery and increased flight activity to and from Sri Lanka.
Sovereign Bond Maturity and Legal Challenges
The airline also addressed concerns surrounding its $211.57 million in outstanding Sovereign Guaranteed International Bonds, which include $175 million in principal and $36.57 million in unpaid interest. These 7% bonds, issued in 2019, matured on 25 June 2024, but have since become the subject of ongoing debt restructuring negotiations, in line with Sri Lanka’s broader sovereign debt restructuring framework.
In 2025, the Cabinet of Ministers approved the appointment of Lazard Frères SAS as international financial adviser, and Norton Rose Fulbright LLP as international legal counsel. A restructuring plan has been submitted and is under discussion with an ad hoc committee of bondholders.
Tensions escalated when, on 11 June 2025, the airline received a statutory demand from the bond Trustee’s Delegate, threatening a winding-up application under Sri Lanka’s Companies Act No. 07 of 2007 if payment was not made by 2 July 2025.
In response, SriLankan filed for an injunction, and the Commercial High Court issued an enjoining order in favour of the airline. The Attorney General’s Department, representing the Government, argued that no cause of action had arisen to justify a winding-up petition.
S&P Outlook and Restructuring Path
S&P Global Ratings in September 2025 acknowledged Sri Lanka’s ongoing efforts to finalise its commercial debt restructuring, including SriLankan Airlines bonds, following the December 2024 exchange of most Eurobonds.
While some holdout creditors remain a risk, S&P noted that comparability-of-treatment principles and most-favoured creditor clauses in restructured agreements offer assurance that overall progress on debt restructuring is unlikely to be derailed.
Leave a comment