SriLankan Airlines and the Government of Sri Lanka have reached an agreement in principle with major bondholders on the restructuring of USD 175 million in Guaranteed Bonds due June 2024, subject to the approval by the Cabinet, IMF, and the Official Creditor Committee (OCC).
The discussions took place between 23 October and 19 November 2025, with the Company represented by its financial and legal advisors, Lazard and Norton Rose Fulbright LLP, and the Group, which controls approximately 55% of the outstanding Notes, represented by legal advisor Akin Gump Strauss Hauer & Feld.
The in-principle agreement outlines the financial parameters for the restructuring, which remain subject to final approval by Sri Lanka’s Cabinet of Ministers, as well as non-objection from the International Monetary Fund (IMF) and the Official Creditor Committee (OCC), in line with the Government’s broader public debt restructuring program.
Under the agreed terms, the restructuring will include a 15% haircut on the total claim amount of the Notes, with the remaining balance to be exchanged for a combination of cash and medium-term Government bonds carrying a 4% interest rate. The implementation of these terms will allow SriLankan Airlines to normalize its relations with external creditors and focus on maintaining ongoing operations.
“Under the in-principle agreed terms, and subject to the successful implementation of the restructuring in accordance with such terms, the Government will be discharged from its liability pursuant to the guarantee and benefit from substantial debt and immediate liquidity relief to maintain the hard-fought long-term sustainability of its public finances,” the statement said.
Commenting on the agreement, SriLankan Airlines Chairman Sarath Ganegoda said: “We are very pleased to have finally reached an agreement with the Ad Hoc Group of Bondholders, allowing us to now look to the future of our Company with greater optimism. We thank them for their patience and for the pragmatic approach they adopted to avoid an unnecessary escalation of this situation, which would have been detrimental to everyone. Our island nation should rely on a well-functioning airline company for its economic prosperity.”
Dr. Harshana Suriyapperuma, Secretary to the Treasury, said: “Today we are taking a new step in the full normalization of our relations with our external partners and in our efforts to restore our public finances. Thanks to this agreement, 99% of our external debt will now be settled. We count on the support of our official partners to assist us in this crucial new phase, which should also enable us to bolster our credit rating and prepare our eventual return to international capital markets.”
The terms of the in-principle agreed restructuring have been communicated to Sri Lanka’s Official Creditor Committee for their non-objection, as well as the International Monetary Fund to ensure compliance with Sri Lanka’s long term debt sustainability. Upon their confirmation, the Parties expect to be able to implement the transaction by the end of the year, it added.
Both the Government and SriLankan Airlines expressed their appreciation to the Ad Hoc Group and their advisors for constructive engagement throughout the discussions.
SriLankan Airlines Bond Restructure Statement En by Adaderana Online
