- Sri Lanka is weighing a partial stake sale of SriLankan Airlines while retaining majority state control in 2026.
- Foreign ownership remains capped at 49%, limiting the scope for outside investors to gain full operational authority.
- The airline faces $1.27 billion in liabilities despite recording a modest operational profit in the latest fiscal year.
(SRI LANKA) – Sri Lanka is weighing a partial sale of SriLankan Airlines to attract investment and improve liquidity, while keeping the government as the controlling shareholder.
The plan under discussion would stop short of full privatization and keep the state in charge of the flag carrier. Sri Lankan rules also set a foreign ownership limit of 49%, which leaves little room for any sale that would hand control to an outside investor.
A report published on May 18, 2026 said the government was reconsidering a deal structure after the NPP-led administration dropped earlier privatization plans in September 2024. The newer approach centers on a partial sale rather than an outright exit.
Sri Lanka still owns 99.52% of SriLankan Airlines. That shareholding gives the state broad room to restructure the carrier, but it also ties public finances to an airline that has posted years of weak results.
Those pressures remain heavy despite a better recent year. Since 2015, the airline has accumulated operational losses of $575 million, even after reporting an operational profit of $93 million in its latest fiscal year.
Liabilities still tower over that improvement. SriLankan Airlines carries short-term liabilities of LKR234.5 billion, or $769.4 million, and long-term liabilities of LKR154 billion, or $505.3 million.
Foreign ownership limit: Sri Lanka caps foreign ownership of SriLankan Airlines at 49%, and the government is seeking a structure that preserves majority state control.
Colombo has already stepped in once to ease the burden, absorbing $512 million of the airline’s debt. Even with that relief, the carrier remains a financing problem for the state as officials look for a buyer willing to inject capital without taking control.
Six entities were previously accepted to bid: AirAsia Consulting Sdn. Bhd., FitsAir, Hayleys PLC, Dharshaan Elite Investment Holding Ltd., Sherisha Technologies Ltd., and Treasure Republic Guardians Ltd.. That list shows that interest has come from both aviation-linked firms and broader investment groups.
| Bidder | Affiliation/Background | Status (as of source) | Notes |
|---|---|---|---|
| AirAsia Consulting Sdn. Bhd. | Consulting arm linked to AirAsia | Previously accepted to bid | One of six entities cleared in the earlier process |
| FitsAir | Sri Lankan low-cost carrier | Previously accepted to bid | Domestic aviation-linked bidder |
| Hayleys PLC | Sri Lankan conglomerate | Previously accepted to bid | Diversified local business group |
| Dharshaan Elite Investment Holding Ltd. | Investment holding company | Previously accepted to bid | Included in the earlier bidder pool |
| Sherisha Technologies Ltd. | Technology company | Previously accepted to bid | Non-airline bidder on the accepted list |
| Treasure Republic Guardians Ltd. | Investment group | Previously accepted to bid | Part of the six accepted entities |
Nimal Siripala de Silva, speaking as head of the Port, Shipping, and Aviation Ministry, has tied the sale structure directly to that ownership cap. No transaction can place more than 49% in foreign hands, which makes a partial sale the practical route if the government wants outside money and continued control.
Officials are also considering a broader restructuring package. One option would place ground-handling and catering under the same entity as the airline, a step aimed at making the offer more appealing to investors and giving the business a stronger cash base.
Nimal Siripala de Silva: “Now we are showing the bride, who is looking more attractive. We just have to see who the groom will be.”
That remark captures the government’s current pitch. Ministers are trying to present a cleaner balance sheet and a more marketable operating structure after years in which privatization plans stalled, losses mounted, and state support remained necessary.
The shift from full privatization to a partial sale marks a political and regulatory compromise. It lets the government say it is reducing the burden on the state while avoiding a full transfer of a national carrier that still carries symbolic value.
September 2024 marked the point when the NPP-led government abandoned the earlier privatization path. By May 18, 2026, the discussion had moved to a narrower sale model designed to bring in fresh capital without breaching the ownership ceiling.
Tax or residency consequences for investors are not part of this article and are not discussed in the reported sale framework. Anyone assessing an investment tied to SriLankan Airlines or Sri Lanka should consult a qualified tax professional on cross-border ownership and residency questions.
Next signals are likely to come from the Ministry of Finance (Sri Lanka) and the Port, Shipping, and Aviation Ministry as officials decide whether to reopen the process and whether ground-handling and catering remain part of the same package.
This article contains information about financial and regulatory matters that may affect investment and tax status. It is not tax or legal advice.
Readers should consult qualified professionals for tax, legal, and financial guidance related to foreign investment and airline privatization in Sri Lanka.
