SriLankan Airlines says govt-backed loans not defaulted, but extended

ECONOMYNEXT – State-run SriLankan Airlines said it had not defaulted on loans guaranteed by the government, which the Treasury said it had not been able to repay, but they have been extended, referring to an EconomyNext story quoting a finance ministry report published on June 15.

"The Government bears contingent liabilities over the provision of guarantees for loans obtained from People’s Bank and Bank of Ceylon as well as Sovereign Guarantee issued for the International Bond," the finance ministry report said.

"These have become obvious liabilities for the government as the company was unable to repay at least a single instalment for 2 consecutive (sic) using internally generated funds of SLA."

The full reply from SriLankan is reproduced below:

SriLankan Airlines wishes to categorically deny the facts stated in the Economy Next news story titled “SriLankan Airlines defaults on some state bank loans.”

The article is misleading the general public and the stakeholders. SriLankan Airlines has not defaulted any of its loans. 

The said article in Economy Next states quoting the Finance Ministry’s annual report that “State-run SriLankan Airlines has defaulted on loans which have been backed by government”.

SriLankan Airlines wishes to state that this is a misinterpretation of a specific section of the Finance Ministry’s annual report on SriLankan Airlines. The Airline clarifies that that all loans from the state banks have been extended on maturity.”