Sri Lanka’s loss-making Mattala Rajapaksa International Airport will need a complete overhaul if it wants to attract investors, analysts warn, after a 30-year lease agreement with an Indo-Russian joint venture failed commercially.

The nation’s second international airport, built with Chinese loan, is located near a wildlife sanctuary on the island’s southern coast. It has no regular flights.

Since opening in 2013, the small airport has failed to generate enough revenue to cover even its...