SriLankan Airlines and govt finalise $175 million bond restructuring

SriLankan Airlines and the Government of Sri Lanka have completed the airline’s international bond restructuring with over 99% participation, marking a key step in the national carrier’s recovery. 

Officials said the deal, involving a 16% haircut and new bonds, supports both the airline’s stability and Sri Lanka’s wider debt restructuring.

Accordingly, SriLankan Airlines Limited and the Government of Sri Lanka today announce the expiration of the Consent Solicitation, Exchange and Tender Offer related to the Company’s U.S.$175,000,000 Guaranteed Bonds due June 2024, guaranteed by the Government.

On 20 February 2026, the Airlines launched an official invitation to holders of the Existing Bonds to tender and exchange their holdings for cash and the U.S.$-denominated 4.00% amortizing PDI bonds due 2028 issued by the Government, pursuant to the agreement in principle reached on 20 November 2025 with the members of the Ad Hoc Group of Bondholders – together holding approximately 55% of the aggregate outstanding amount of the Existing Bonds. 

“Following the expiration of the offer period, the Company and the Government are delighted to report a very high level of participation of over 99% of the total outstanding amount of the Existing Bonds,” a statement said. 

Bondholders representing more than 97% of the outstanding amount voted in favour, resulting in all Existing Bonds being tendered and exchanged on the settlement date, it said.

SriLankan Airlines Chairman, Mr. Sarath Ganegoda, reacted to the results stating: “We are sincerely appreciative of the bondholders’ strong participation. The overall transaction results in a 16% haircut on the outstanding claim, and its successful completion marks a significant step forward that allows us to focus on the future of the Company with renewed optimism. As the flag carrier of our island nation, this important progress toward financial recovery will further strengthen our ability to support Sri Lanka’s economic prosperity.” 

Secretary to the Treasury at the Ministry of Finance, Dr. Harshana Suriyapperuma, issued the following statement: 

“The successful completion of this transaction paves the way for the full normalization of our relations with our external partners. Having now successfully concluded restructuring agreements covering 99% of our public external debt, we extend our sincere appreciation to all stakeholders who supported Sri Lanka throughout this process. This achievement strengthens our position as we pursue our efforts to improve our credit rating.”

The settlement of the exchange and tender offer is intended to take place on 20 March 2026, subject to the relevant settlement conditions being satisfied.