Sri Lankan Airlines declares default on its 175 million dollar sovereign-guaranteed bond

Colombo: Sri Lankan Airlines has declared a default on its 175 million dollar sovereign-guaranteed bond, due to its inability to make the December 2022 coupon payment. The grace period for the payment has now expired. In a filing with the Singapore Exchange, the airline informed that it has defaulted on the payment, and is now seeking a solution in discussions with bondholders. 

According to Chairman Ashok Pathirage, the airline is taking guidance from the government's debt restructuring advisors. He also confirmed that the coupon payment will not be made starting from



December.

Meanwhile, the state run airlines has grounded three aircraft due to a lack of funds for engine repairs and owes 1.2 billion dollar.

Despite this, payments for the lease rental must be made regardless of the aircrafts' usage. Sri Lankan Aviation minister Nimal Siripala De Silva said, government did not have sufficient funds to repair the three grounded aircrafts. 

The airline was previously privatized under President Chandrika Kumaratunga and managed by Emirates before being taken back by the state under President Mahinda Rajapaksa.