Sri Lanka Mihin Lanka losses mount, assets negative

Officials from the CA Sri Lanka overseas chapters

June 10, 2011 (LBO) – Sri Lanka’s state-run Mihin Lanka, a budget carrier, has lost 5.8 billion rupees since it was started in 2007 and it had a 5.6 billion rupee gap in the balance sheet despite capital injections from people’s tax money, official data shows.

According to data the state had injected 2.7 billion rupees from taxes collected from the people as capital to the airline by 2010, adding to 250 million rupees in seed capital and taking the total to 3,004 million rupees.

Data also showed that the Treasury had given guarantees to state banks to give money to the airline.

In November 2009, a 1,552 million rupee guarantee has been given to Bank of Ceylon, a state run bank, on which 1,519 million rupees had been borrowed.

Another guarantee had been given for 252 million rupees, on which 1,771 million had been borrowed.

Mihin Lanka had expanded operations to Kuwait, Bodhgaya and Varanasi adding to Dubai and Trichy.

The finance ministry report said Mihin Lanka has been encouraged to restructure its balance sheet and focus on regional routes, while SriLankan Airlines focuses more on long haul routes. Mihin Lanka was started by the state despite the country’s full service airline, SriLankan Airlines making losses throughout mos

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