Cash-strapped Sri Lanka's loss-making national carrier revealed plans Thursday to lease up to 21 aircraft, just two days after the government announced a default on its $51 billion foreign debt.
The island nation is in the grip of its most painful economic downturn since independence in 1948, with severe shortages of essential goods and regular blackouts causing widespread misery.
Huge protests have called for the resignation of the government, which has begged Sri Lankans abroad to send cash home to help pay for essential imports.
Despite the crisis, state-owned Sri Lankan Airlines has unveiled plans to expand its fleet from 24 to 35 planes in the next three years and replace some of its ageing jets.
"Sri Lankan Airlines has issued four requests for proposal to lease up to 21 aircraft to support its long-term business strategy," it said in a brief statement.
The announcement came after the government suspended repayment of all its foreign borrowings, ahead of negotiations for a debt restructure with the International Monetary Fund next week.
The national carrier did not say how it planned to finance the leases, with its balance sheet showing a $1.7 billion debt and a carried forward loss of $1.56 billion in March 2020.
It also came the same day international ratings agency Fitch downgraded $175 million in bonds issued by the airline from C to CC, suggesting the carrier was "near default".
Fitch said the airline's new rating, on debt due in June 2024, was in line with Sri Lanka's default announcement.
The IMF has repeatedly urged Sri Lanka to privatise the airline, saying it was a white elephant the country cannot afford.
The airline was profitable before the government cancelled a management agreement with Emirates of Dubai in 2008, following a personal dispute with current Prime Minister Mahinda Rajapaksa.
The carrier had refused to bump fare-paying passengers and give their seats to members of Rajapaksa's family, who were returning from a holiday in London.
Rajapaksa removed the Emirates-appointed chief executive of Sri Lankan Airlines and made his brother-in-law Nishantha Wickremasinghe head of the company.
An earlier plan to lease eight Airbus A350 jets during Rajapaksa's tenure is subject to an ongoing criminal investigation.
The airline's then-chief executive Kapila Chandrasena and his wife were arrested two years ago after an international investigation found they received at least $2 million in kickbacks over the order.
UK footfall fell 1.8 per cent in September year-on-year, with high street visits down 2.5 per cent.
Consumer confidence dropped to -10.4 per cent in Q2 2025, its lowest level since early 2024.
Last year's Budget added £5bn in employment costs to the retail industry.
Job security sentiment declined by 4.8 percentage points, falling below the long-term average.
Footfall figures decline
Consumer caution ahead of the upcoming budget has led to a notable fall in UK high street footfall, as rising employment costs and subdued spending weigh heavily on retailers, according to new figures from the British Retail Consortium (BRC).
The BRC reported a slowdown in shopper visits across most retail locations, signalling growing concern among consumers over job security and personal debt.
London tube strikes in mid – month and disruption caused by storm Amy, has further reduced footfall in key shopping areas.UK footfall fell by 1.8 per cent in September compared with the same month last year, a sharper decline than the 0.4 per cent drop seen in August, according to BRC-Sensormatic data. High street visits were down 2.5 per cent year on year, while footfall at retail parks and shopping centres fell by 0.8year and 2 per cent respectively.
The decline comes as retailers brace for another challenging quarter, with chief executive Helen Dickinson warning that the government’s fiscal decisions are limiting their ability to invest. “Retailers’ ability to invest in local communities and high streets has been hampered by last year’s Budget, which added £5 bn in employment costs to the industry, in addition to a new packaging tax,” she said.
Consumer confidence weakens
Parallel data from Deloitte’s Consumer Confidence Index reinforces this cautious outlook. Consumer confidence fell by -2.6 percentage points to -10.4 per cent in Q2 2025, marking its lowest level since early 2024.
Sentiment around job security declined sharply by -4.8 percentage points, slipping below the long-term average for the first time in two years, while confidence regarding debt levels dropped by -3.7 percentage points, reflecting the burden of higher household bills and seasonal spending pressures.
Deloitte noted that sentiment about the economy remains deeply negative at -51per cent, far below the -32.5 per cent recorded a year ago. As households tighten budgets, essential spending has slipped, though consumers continue to prioritise discretionary experiences such as travel and holidays.
Linda Ellett, head of consumer, retail & leisure KPMG, observed that “cost continues to influence buying behaviour and price is the main purchasing driver for 68 per cent of people when buying everyday items.”
With food and utility inflation still biting, and employers under strain from higher national insurance and minimum wage costs, retailers are caught in a tightening squeeze. Retailers are now pinning hopes on a supportive November Budget to ease cost pressures and restore some confidence before the crucial Christmas trading period.
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