SriLankan, Mihin Lanka get more funds as losses narrow

Singapore
Source:
This story is sourced from Pro
See more Pro news »

The Sri Lankan government will continue to provide financial assistance to both SriLankan Airlines and Mihin Lanka as both carriers recorded losses for the first half of the 2013/14 financial year.

Budget documents from the country show that SriLankan made an operating loss of Sri Lanka rupees (SLRs) 15.8 billion ($121 million) for the six months to the end of September 2013. Revenue for the carrier came in at SLRs54.4 billion, while expenses totalled SLRs70.2 billion.

For the full year, the flag carrier is forecast to lose SLRs26.7 billion, a small improvement from the SLRs30 billion loss in 2012.

Mihin Lanka recorded a loss of SLRs675 million over the same period, but no breakdown of expenses and revenues was provided. It is forecast that the low-cost carrier will lose SLRs1.42 billion for the 2013 financial year, down from the SLRs2.87 billion loss recorded in 2012.

Despite the losses, both carriers will share $200 million in government funds from the country's recently released 2014 budget.

President and finance minister Mahinda Rajapaksa says that $150 million has been allocated to SriLankan while $50 million will go to Mihin Lanka. He did not say what the funds will be used for, but it is expected that they will be added to the carriers’ working capital.

“SriLankan Airlines and Mihin Lanka are implementing a network expansion strategy to connect Sri Lanka as a transit hub to Europe, Africa, Middle East and the Asia-Pacific region,” adds Rajapaksa.

Rajapaksa also noted in his speech that the treasury has made arrangements to take over shares in SriLankan that were previously acquired by state banks to allow them to “be relieved of this burden.”

The banks acquired Emirates Airline’s 44% stake in SriLankan in 2010 after Colombo ended a long-term management agreement with the Dubai-based carrier.

SriLankan is also planning to join the Oneworld alliance in the first quarter of 2014, and its chairman, Nishantha Wickremasinghe, has indicated recently that it would seek to merge with another carrier within the alliance. This has led to speculation that International Airlines Group, the parent of British Airways and Iberia, could be the likely target.

Flightglobal's Ascend Online Fleets database shows that SriLankan has a fleet of 21 Airbus aircraft with orders for six A330-300s and seven A350-900s. Mihin Lanka, meanwhile, has a fleet of one A320 and two A321s.