Sri Lanka’s national airline, SriLankan Airlines, has announced a staggering annual loss of $525 million, adding to the financial crisis plaguing the cash-strapped country. With nearly 6,000 employees, the airline is the largest and most expensive among the state-owned enterprises that have been draining the country’s budget. As part of the country’s $3 billion bailout from the International Monetary Fund (IMF), Sri Lanka is required to restructure, a euphemism for privatization, the airline and 51 other loss-making state enterprises.
In a statement, SriLankan Airlines revealed that it incurred a loss of 163.58 billion rupees ($525 million) in the year ending in March 2022, more than triple the previous year’s deficit, which was already impacted by the COVID-19 pandemic.
The airline’s financial troubles were further compounded when it missed interest payments on a $175 million bond in December, following the government’s own default on sovereign debt due to a shortage of foreign exchange.
Chairman Ashok Pathirage acknowledged the unprecedented financial crisis faced by the nation, which severely affected the airline’s recovery from the pandemic. He expressed hopes that the restructuring process would make SriLankan Airlines viable, but did not disclose any plans regarding the potential sale of the carrier. However, concerns have been raised about the willingness of private investors to inject funds into the company.
The economic crisis in Sri Lanka has led to months of food and fuel shortages, triggering social unrest. At its peak, an angry mob stormed government buildings, and the former president was chased into exile. To stabilize state revenue, the government has implemented measures such as doubling income taxes, increasing electricity tariffs, and removing fuel subsidies.
It is worth noting that SriLankan Airlines has not recorded a profit since 2008. During that time, the CEO was dismissed by the then-president for refusing to prioritize the leader’s family members over fare-paying passengers.