State-run SriLankan Airlines group has lost 10.7 billion rupees in the three months to June 2025, down from 12.9 billion rupees last year but operating losses had widened, despite improvement in traffic, a Finance Ministry report said.

SriLankan had posted revenues of 51.7 billion rupees, up 1.5 billion rupees in the June quarter, helped by high higher traffic volumes and a big improvement in load factor to 82.3 percent a from 74.8 last year.

The airline had carried more than one million passengers across 3,217 flights during the quarter, with traffic growing 23 percent, the report said.

But cargo revenue had declined 13 percent to 7.1 billion rupees, and other revenues had also fallen, bringing net traffic revenues to 62.7 billion rupees, down from 63.8 billion rupees last year.

As a result, operating losses had increased to 5.2 billion rupees in the June 2025 quarter from 3.5 billion rupees last year.

However, Sri Lankan Catering had posted profits, helping generate a group operating profit.

With finance costs of 6.4 billion rupees and exchange losses of 4.9 billion rupees and penalties there was a group net loss of 10.7 billion rupees in the three months.

Exchange losses are a problem coming from the central bank’s flawed operating framework. From the time the central bank was set up, the rupee had been depreciated from 4.77 to the US dollar to 300 plus now.

But the excessive large dollar debt, is coming from bad management under state ownership, analysts say. SriLankan was given loans by state banks and it also borrowed from bondholders under a sovereign guarantee, instead being forced to make the required changes as private firms do to survive.

SriLankan had assets of 191.5 billion rupees, including aircraft-related rights-of-use assets and liabilities of 606.7 billion rupees.

Accumulated losses were 628.3 billion rupees, leading a 415.2 billion rupee hole it its balance sheet. A part of the accumulated losses also came from the central bank’s faulty operating framework.

SriLankan Airlines’ board has approved a business plan starting from 2025/26, the report said.

SriLankan has had several plans under full state ownership since Emirates exited as its managing shareholders, but losses and debts have continued to mount despite frequent capital injections from tax payer money.

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