The Government has launched a fresh attempt to chart the future of loss-making national carrier SriLankan Airlines, which has a Rs. 340 billion-sized hole in its balance sheet, appointing a high-powered committee to conduct a strategic review and oversee a comprehensive restructuring process aimed at restoring financial sustainability while reducing the burden on public finances.
The President’s Media Division yesterday said that Cabinet of Ministers has approved the appointment of a committee chaired by Presidential Adviser on Digital Economy Dr. Hans Wijayasuriya, bringing together expertise in economic policy, corporate strategy, investment banking, aviation, law and public administration.
The move comes after several years of failed privatisation and restructuring efforts, with successive governments struggling to resolve the future of an airline that has long occupied a contentious place in Sri Lanka’s public finances and economic policy debates.
Joining the committee are Senior Presidential Economic Adviser Duminda Hulangamuwa, corporate strategy specialist and Economist Deshal De Mel, investment banker and Asia Securities Chairman Dumith Fernando, representatives of the Finance and Transport Ministries, the airline’s Chairman, legal specialists and aviation experts.
According to the President’s Office, the Government has identified the restructuring of SriLankan Airlines as an urgent priority requiring a comprehensive strategic review within the broader macroeconomic context.
Unlike previous efforts that largely focused on ownership and divestment options, the latest initiative places emphasis on establishing a financially sustainable and commercially efficient national carrier while reducing the long-term fiscal exposure of the State.
The committee will work alongside the World Bank Group’s International Finance Corporation (IFC), which has been appointed as Transaction Adviser to support the restructuring process.
Its mandate includes conducting an independent assessment of the airline’s strategic direction, recommending restructuring requirements and potential restructuring models, evaluating alternative strategic pathways and identifying the option most aligned with the Government’s objectives.
The committee will also provide oversight and guidance during implementation of the selected strategy, signalling that its role extends beyond diagnostic review to execution support.
SriLankan Airlines has remained under pressure from accumulated losses, debt obligations and repeated capital support requirements over the years, making it a recurring focus of fiscal reform discussions under Sri Lanka’s broader public sector restructuring agenda.
The inclusion of specialists in mergers and acquisitions, corporate restructuring and transaction advisory services indicates that the review is likely to examine a range of options, including strategic partnerships, operational restructuring, capital reorganisation and alternative ownership structures, although the Government has not indicated any preferred outcome.
The committee will remain in operation throughout the strategic review and restructuring process until formally dissolved by the Government.
The latest initiative comes as policymakers increasingly focus on reducing fiscal risks arising from state-owned enterprises while seeking to improve efficiency and commercial discipline across strategically important public assets.
SriLankan Airlines enters the restructuring process against the backdrop of improving operating performance but continued balance sheet stress.
During the 2025/26 financial year, passenger revenue increased to Rs. 265.9 billion from Rs. 234.5 billion, while total net traffic revenue rose to Rs. 333.5 billion from Rs. 298.9 billion. Earnings before interest and tax (EBIT) improved by 13.8% to Rs. 26.4 billion, reflecting stronger operating performance across the business.
However, the airline’s financial position continued to be constrained by legacy debt obligations and exchange rate volatility. While interest expenses declined sharply to Rs. 24.7 billion from Rs. 36.2 billion following debt restructuring measures, foreign exchange losses weighed heavily on the bottom line, resulting in the net loss before tax widening to Rs. 23.2 billion from Rs. 7.6 billion a year earlier.
The Government continued to support the carrier’s balance sheet restructuring during the year, including the restructuring of its $175 million international bond and a Rs. 25.28 billion equity injection. As a result, total liabilities declined to Rs. 544.4 billion from Rs. 585.1 billion, while negative equity improved to Rs. 339.7 billion from Rs. 403.2 billion.
The Finance Ministry has maintained that the broader State-owned enterprise reform agenda is aimed at improving governance standards, operational efficiency and commercial viability, while reducing long-term fiscal risks and strengthening the contribution of public enterprises to the economy.