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With Government Help, SriLankan Airlines Is Re-Financing Its Debts To Improve Liquidity

Last updated on June 25, 2020

SriLankan Airline top management has been seeking ways to improving its liquidity reserves in order to weather the severity of the COVID19 crisis. With the Sri-Lankan government help, it may be able to raise $75 million in debts while also re-financing some $400 million it already owes.

The debt burden outstanding currently includes $220 million US dollars with state-run Bank of Ceylon, $187 million US dollars to the People’s Bank along with $30 million facility with Credit Suisse.

The airline which has lost $130 million for the year’s first quarter also owes some $275 million to the state-run Ceylon Petroleum Company for its fuel-related expenses.

The cabinet of Ministers which has given the green light to the new $75 million loan had already taken measures to bolster the airline industry by waiving the payment of withholding taxes, allowing SriLankan Airline to write off a $30 to $40 million expense. With other measures taken by the airline, such as sending employees and contractors on furlough, another $30 million may be saved.

Overall, with strong government backing, the carrier seems to be well positioned also on account of its strong record in making interest payments to creditors on time. Bolstering that claim, a $6 million dollar interest payment on dollar bond would also be paid this month on time, according to the company’s Chief Executive Vipula Gunatilleke, quoted by the Economy Next website.

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