From recording a profit of Rs. 4.9 billion in 2008 to accumulating losses exceeding Rs. 630 billion over the years, SriLankan Airlines continues to face serious financial challenges, with rising fuel costs and geopolitical tensions adding further pressure on the national carrier.
According to the Ministry of Finance, the airline is facing significant financial difficulties amid the ongoing conflict in the Middle East, instability in West Asia and rising global fuel prices.
The concerns were highlighted in the Ministry’s Mid-Year Fiscal Position Report, which states that SriLankan Airlines recorded a loss before tax of Rs. 35.6 billion during the first three months of the 2026/27 financial year.
According to unaudited management accounts submitted to the Ministry, the airline generated revenue of Rs. 82.8 billion during the period, compared with Rs. 62.6 billion in the corresponding period of the previous financial year.
Despite the increase in revenue, expenditure rose by 40.4 per cent, from Rs. 67.8 billion to Rs. 95.2 billion.
The report identifies a 93 per cent increase in aviation fuel costs, driven by the conflict in the Middle East, as the main reason for the sharp rise in expenditure.
Higher fuel costs and foreign exchange-related pressures contributed to an estimated operating loss of Rs. 12.5 billion during the quarter.
The Ministry also identified persistent structural weaknesses, liquidity constraints, high maintenance costs and the airline’s substantial debt burden as major challenges to its financial sustainability.
The Government has had to intervene to meet the airline’s financing requirements. Following the restructuring of a US$175 million loan, a restructured banking liability of US$126.5 million was transferred to the Government’s debt stock on March 20. A further US$30 million was provided to meet the airline’s short-term financing requirements.
A Long History of Financial Losses
The airline’s current financial difficulties are part of a much longer history of losses and controversy.
In 2008, when the Government took control of SriLankan Airlines, the national carrier had recorded an annual profit of Rs. 4,899 million.
The circumstances surrounding the takeover later became controversial following allegations that a powerful politician had pressured the airline to delay a scheduled flight from London to Sri Lanka to accommodate his return journey. The airline reportedly refused to comply.
Following the takeover, SriLankan Airlines entered a prolonged period of financial losses.
The airline recorded losses of Rs. 9,996 million in 2009, Rs. 6,034 million in 2010 and Rs. 202 million in 2011. The losses subsequently increased to Rs. 17,208 million in 2012, Rs. 26,857 million in 2013 and Rs. 31,365 million in 2014.
Substantial losses continued in subsequent years, including Rs. 41,700 million in 2019, Rs. 44,139 million in 2020 and Rs. 49,704 million in 2021.
The financial situation deteriorated further in 2022, when losses reached Rs. 163,583 million, followed by Rs. 71,306 million in 2023.
The airline’s cumulative losses over the years have now exceeded Rs. 630 billion.
Management Appointments and Allegations
Management appointments and allegations of irregularities have also remained central to questions surrounding the airline’s financial decline.
Following the Government takeover in 2008, Nishantha Wickremesinghe, the brother of Shiranthi Rajapaksa, wife of then President Mahinda Rajapaksa, was appointed Chairman of SriLankan Airlines.
Allegations subsequently emerged concerning the management of airline resources and financial decisions during his tenure. Legal proceedings are currently underway over alleged financial losses associated with that period.
Another key figure who came under scrutiny was Kapila Chandrasena, who was appointed Chief Executive Officer in July 2011.
The J.C. Weliamuna report and audit reports raised concerns about his conduct and alleged financial irregularities within the airline. He was removed from his position following the change of Government in 2015.
However, Chandrasena was reappointed to SriLankan Airlines during the 52-day Government that began on October 26, 2018, when Mahinda Rajapaksa returned as Prime Minister.
The reappointment raised questions given the allegations and concerns previously raised about his tenure.
The controversial Airbus deal also became a major focus of investigations into the airline’s financial affairs.
During court proceedings relating to the deal, allegations were presented concerning a payment of Rs. 100 million to Namal Rajapaksa, who is currently in remand custody. The related matters remain subject to legal proceedings.
Questions Over the Airline’s Financial Future
With cumulative losses exceeding Rs. 630 billion, the latest figures once again highlight the financial challenges facing SriLankan Airlines.
While rising fuel prices and geopolitical instability have intensified the current crisis, the airline continues to face longstanding structural weaknesses, substantial debt obligations and questions surrounding its management.
The Ministry of Finance’s latest assessment highlights the continuing difficulties in making the national carrier financially sustainable.
The impact extends beyond the airline itself, as Government assistance and financial liabilities place additional pressure on public finances, ultimately raising concerns about the burden on taxpayers.
