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President allows SriLankan Airlines strategic plan to work, if not, open to other options
View(s):By Kapila Bandara
Other options will be considered for the national carrier if the strategic plan by the board and its management does not produce a justifiable outcome, President Anura Kumara Dissanayake told Parliament Friday in his Budget 2026 presentation.
“The board has been given a timeline. They have given us a plan. And if, after implementing their plan and there is no justifiable outcome, then the Government will be open to think differently about the airline,’’ President Dissanayake said. As Finance Minister, he has often underlined the carrier’s strategic importance to the country.
SriLankan Airlines rolled out a five-year strategic plan to regain operational efficiency. An important pillar of the strategy is to rebuild the fleet, alongside expansion of the network.
SriLankan Airlines has rolled out a five-year strategic plan which includes rebuilding its fleet, alongside expansion of the network.
Operating expenses have fallen to Rs 333.492b from Rs 444.467b in 2022/23.
Net finance costs in 2023/24 have dropped by Rs 13.625 billion to Rs 36.564b from Rs 50.189b in 2022/23.
The president also said Friday that the process of successfully restructuring the debt of SriLankan Airlines is continuing.
He was referring to overhauling of legacy debt including the unpaid, US$175 million sovereign guaranteed international bond. The airline has not made coupon or principal payments on the bonds since December 2022.
Up to January 2025, the airline has been infused with Rs 6.3b equity support to help build its liquidity position.
The Government and the financial advisor Lazard Freres are evaluating proposals to negotiate with bondholders. The Cabinet approved a restructuring plan by the adviser and the airline has said the adviser is engaging with the ad hoc committee of bondholders “for a potential restructuring plan”. Norton Rose Fulbright Llp is the airline’s international legal adviser to deal with bondholders and the trustee, DB Trustees (Hong Kong) Ltd. In June 2025, Law Debenture Trust (Asia) Ltd, with offices in Hong Kong, threatened to file a winding up application, but the airline got a Commercial High Court enjoining order in July 2025. The airline contended that neither the law firm nor the trustee are creditors.
In Budget 2026, President Dissanayake allocated Rs 446 billion including Rs 56b recurrent expenditure, for transport, ports, highways and civil aviation.
The National People’s Government he leads, took a decision to support the national carrier instead of privatising it and to overhaul the debt.
There were repeated failures by previous governments to entice buyers, the last effort being under accountant Suresh Shah, who headed the ‘State Owned Enterprise Restructuring Unit’. A former CEO of Lion Brewery, Mr Shah repeatedly questioned the state running any business and failed to entice an investor to SriLankan Airlines by June 2024. In July, the bidding process ended. At the time in 2023, the airline had an unsustainable debt stock of US$826m, impeding cashflow. Part of the cash flow went into repaying interest bearing liabilities and leases.
On Friday, President Dissanayake noted the airline had become a controversial subject along with its burden on public funds.
He said the Government has had discussions with the airline management and the board. “A solid plan has been presented and they have made us believe the airline can be rebuilt. So far, no one has sought to acquire it. For it to be sold, the airline has to be further modernised from its existing state.”
Divestment is not only about selling a majority or minority interest. It can also mean conversion into limited liability entities, issuing new shares, or even disposing of existing shares. There are other options, too.
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