Fitch affirms SriLankan Airlines’ Govt. guaranteed bonds at ‘BB-’

Fitch Ratings has affirmed the rating on SriLankan Airlines Limited’s (SLA) US dollar-denominated government guaranteed bonds at ‘BB-’. 



KEY RATING DRIVERS 

The national carrier’s bonds are rated at the same level as SLA’s parent, the state of Sri Lanka, due to the unconditional and irrevocable guarantee of principal and interest of the notes provided by government. 

The state held 99.5% of SLA through direct and indirect holdings at end-2015. 

SLA is the national airline of Sri Lanka, and has a 72% share of the total airline seating capacity of the country. The government has identified tourism as a key economic growth driver in the medium term; and the company is well positioned to capture the benefits of this trend as the leading airline in Sri Lanka. Tourist arrivals to Sri Lanka rose to 1.8 million in 2015 from 1.0 million in 2012. 

RATING SENSITIVITIES 

Negative: Developments that may, individually or collectively, lead to negative rating action include: 

- Negative rating action on the Sri Lankan sovereign 

Positive: Developments that may, individually or collectively, lead to positive rating action include: 

- Positive rating action on the Sri Lankan sovereign