SriLankan Airlines’ operating loss widens to Rs. 5.2bn despite passenger boom

The national carrier, SriLankan Airlines (SLA), reported a widening operating loss of Rs. 5.2 billion from its core air transportation business in the first three months of the 2025/26 financial year, according to figures released in the Mid-Year Fiscal Position Report 2025.

This represents a significant deterioration from the Rs. 3.5 billion operating loss recorded in the same period last year, even as the airline experienced a strong recovery in passenger demand.

The airline saw its passenger revenue rise by Rs. 1.5 billion to Rs. 51.7 billion, supported by a 23 percent growth in traffic as it carried more than one million passengers during the quarter. The passenger load factor also showed improvement, climbing to 82.3 percent from 74.8 percent in the previous year.

However, these gains were undermined by declines in other key revenue streams. Cargo revenue fell by 13 percent to Rs. 7.1 billion, and other revenue saw a sharp 28 percent drop to Rs. 3.8 billion. This led to a slight decline in net traffic revenue to Rs. 62.7 billion from Rs. 63.8 billion in the prior year.

On the expense side, total operating expenses increased marginally to Rs. 67.8 billion. This increase was “driven largely by aircraft maintenance cost,” which offset savings from a drop in aircraft fuel and lease costs.

While the airline’s core business loss widened, the group’s overall net loss showed an improvement, narrowing to Rs. 10.7 billion for the quarter from Rs. 12.9 billion in the same period of 2024/25. This was after accounting for significant finance costs of Rs. 6.4 billion and exchange losses of Rs. 4.9 billion. A modest group-level operating profit of Rs. 1.1 billion was recorded before these charges , thanks to contributions from subsidiaries such as SriLankan Catering.

The report underscores the “significant financial stress” the airline remains under. As of the end of June 2025, SriLankan Airlines’ balance sheet showed accumulated losses of Rs. 628.3 billion, which have eroded shareholder equity to a negative balance of Rs. 415.2 billion. 

Total liabilities stood at Rs. 606.7 billion against total assets of Rs. 191.5 billion. The report notes that profitability remains constrained by debt servicing costs. As part of reform efforts, the Cabinet of Ministers has approved a plan to restructure legacy loans worth US$ 210 million and Rs. 31.4 billion, which are to be serviced by the General Treasury through an equity injection into the airline.