SriLankan Airlines (UL, Colombo International) failed to repay installments for up to five years on loans obtained from local financial institutions that date back to 2016/17. The revelation is contained in the latest annual report from the Sri Lankan National Audit Office (NAO) which examined the 2020/21 financial year.
"Sri Lankan Airlines had obtained USD200 million (LKR73.1 billion Sri Lankan rupees) during the year 2016/2017 and rupee loan facilities amounting to LKR29.4 billion (USD80.5 million) during the year 2017/2018 from two state banks for short-term financial requirements on the guarantee of the general treasury," the NAO report states. "None of those basic loans had been repaid as of March 31, 2021."
The total amount owing and unpaid as of Match 31, 2021, was LKR71.621 billion (USD196 million). Colombo-based media note another US dollar loan was secured during the 2020/21 fiscal year totalling USD75 million. SriLankan Airlines told ch-aviation that they did not repay the capital as of March 21, 2021, but since then all new facilities have been repaid. "We have not defaulted on any loan repayments. All loans from state banks are current. Interest is serviced regularly," said a spokesperson.
In April 2022, amid a critical hard currency shortage and a fast-deteriorating economic situation, the Sri Lankan government suspended all external debt repayments. The government owns 99.56% of SriLankan Airlines. In a Singapore Stock Exchange (SGX) filing last week in which the airline said it wanted to defer interest repayments on an unrelated USD175 million bond for 12 months, SriLankan Airlines said the government had embarked on an action plan to address the difficulties it faces, however, the airline warned developing and deploying the strategy would take some time.
