SriLankan Airlines has defaulted on its $175 million bond, having failed to amend the terms of the debt amid the worst economic crisis to engulf the country in its independent history.

The airline failed to make a coupon payment due on Dec. 25, the board said in a statement this week, adding this constituted a default event under the terms of the debt. Executives would be in touch with holders of the bonds, which are backed by the government. 

For the carrier, the drop in business due to the pandemic has been compounded by the country’s economic woes. Bankrupt Sri Lanka is looking to secure an International Monetary Fund loan after massive street protests last year toppled the ruling Rajapaksa family and a drop in foreign-exchange reserves made it impossible to import goods ranging from medicine to coal. 

The airline’s pile of debt totaled $826 million, including the US-currency bond and $352 million owed to state banks, according to a presentation dated Jan. 12. The amount of overdue and future payments owed to lessors and suppliers was $771 million. 

The company had sought to amend the terms of the dollar bond, including deferring a total of $12.25 million worth interest payments due in December 2022 and June 2023 to Dec. 25, 2023. 

As of the end of last year, liquidity equivalent to 3% of annual revenues was on hand, while interest charges were seen amounting to 9% of yearly revenue in 2023-2024, the presentation said.