SriLankan Airlines (UL, Colombo International) will be freed from the shackles of its current financial quagmire with news that the Sri Lankan government is to takeover unproductive investments made in the airline by the country's three state banks: the Bank of Ceylon, the National Savings Bank and Peoples Bank.

“The investments made in SriLankan Airlines by these banks, which have not yielded any returns, will be bought back by the government relieving the banks of such long-term investments,” a report carried by the Daily Mirror said.

According to the paper, the national carrier's debt to the three banks stood at LKR26.8billion (USD212.4million) in 2013 and is expected to grow to LKR36.31billion (USD278.57million) this year.

The move will now allow SriLankan to formulate a viable business plan without having to rely on loan capital as was previously the case.

Government has already infused USD375million in direct funding to the airline since the beginning of the year. With SriLankan set to embark on its refleeting programme in which six A330-300s and four A350-900s will be delivered from October onwards, so Colombo is expected to issue a government-backed international bond of USD175million later in the year.