While SriLankan Airlines has been cleared over the high-profile UAE cyber payment incident, the national carrier continues to confront another serious financial investigation involving alleged internal fraud at its regional office in Chennai, India, even as it completes one of the country’s largest state-backed debt restructuring programmes.
According to airline officials, an internal audit uncovered a long-running scheme in which locally recruited finance employees at the Chennai office allegedly misappropriated approximately INR 22 million. Investigators believe the suspects manipulated invoices, altered payment records and forged management authorizations to divert company funds over an extended period.
The irregularities were first detected by SriLankan Airlines’ head office in Colombo after unusual payment patterns triggered internal financial monitoring systems. A detailed investigation followed, during which the employees allegedly linked to the scheme stopped reporting for duty and are believed to have fled before disciplinary action could be initiated.
The matter has now been referred to Indian law enforcement authorities, who are conducting investigations aimed at identifying those responsible and recovering the missing funds. Airline officials have indicated that cooperation between Sri Lankan and Indian authorities will continue as inquiries progress.
The fraud investigation has unfolded alongside a significant financial restructuring designed to restore the airline’s long-term viability.
One of the most significant milestones involved resolving USD 175 million in International Sovereign Bond obligations. Under the restructuring agreement, the existing debt was replaced with new government-backed amortizing bonds maturing in 2028. Bondholders accepted a 16 percent reduction in value, while approximately 99 percent of investors supported the settlement, enabling the debt to be fully resolved.
In addition, the government completed the restructuring of Rs. 91.3 billion in state bank borrowings by transferring repayment obligations to a Treasury-supported mechanism. Scheduled repayments will now be made twice annually during April and October under a structured programme funded through national budget allocations.
The government has committed Rs. 20 billion to meet the remaining legacy interest and principal obligations arising from these historical liabilities. However, officials have stressed that future financial support will not extend to day-to-day operations.
The Ministry of Finance has directed that SriLankan Airlines must now operate as a commercially sustainable enterprise capable of financing its own operational requirements without recurring government bailouts. Responsibility for improving profitability and strengthening governance has been placed squarely on the airline’s new leadership and board of directors.
Together, the Chennai fraud investigation and the completion of major debt restructuring illustrate the contrasting challenges confronting SriLankan Airlines as it seeks to rebuild public confidence. While historic financial burdens are being resolved through government-backed reforms, strengthening internal controls and preventing future fraud remain essential to securing the airline’s long-term stability and restoring trust in its financial management.