SriLankan Airlines has officially run out of runway. Facing a mountain of debt and years of staggering financial losses, the national carrier has admitted it cannot fully repay its US$175 million government-guaranteed bonds due on June 25, 2024. The airline’s leadership has acknowledged what the market has long suspected — that the money is gone and the airline’s survival is in serious doubt.
The bonds, ironically, are still trading at a high price in the secondary market. Investors assume they will eventually be paid in full because they carry a government guarantee. But SriLankan’s negotiations with bondholders have collapsed, with both sides worlds apart in what they believe the bonds are worth. According to Chairman Sarath Ganegoda, the airline has already burned through over US$2 billion in accumulated losses. “We simply do not have the capacity to pay the bonds in full,” he admitted, underscoring the depth of the crisis.
Ganegoda stressed that any deal with bondholders needs Treasury approval, since taxpayer guarantees underpin the bonds. But with the airline’s balance sheet showing negative net worth, the numbers speak for themselves: SriLankan is technically insolvent.
If financial disaster wasn’t enough, the carrier is also tangled in a looming legal storm. Law Debenture Trust (Asia) Ltd. has moved to dissolve the airline under Section 272(a) of the Companies Act No. 7 of 2007. In retaliation, SriLankan has filed its own case at the Commercial High Court, arguing that the law firm and DB Trustees (Hong Kong) Ltd. are not actual bond creditors and therefore cannot sue to wind it up.
On July 2, 2025, Judge Amali Ranaweera granted an injunction temporarily halting the dissolution proceedings. The court will decide the fate of this injunction on October 13, 2025 — a date that could very well determine the airline’s future.
For a carrier that once branded itself as “The Spirit of Sri Lanka,” the irony is thick: billions in losses, legal battles in court, and an international reputation dragged through the mud. As things stand, SriLankan Airlines seems less like a national asset and more like a bottomless pit of public money.
