Sri Lanka to recapitalize state airlines with US$500mn

July 28, 2011 (LBO) – Sri Lanka’s loss making state airlines will be recapitalized with equity of 500 million US dollars over five years to improve their gearing and allow them to acquire new aircraft, information minister Keheliya Rambukwelle said. The airline has also leased a fleet of newer A320s to upgrade its fleet. Sri Lanka has a state-run full service national carrier, SriLankan Airlines and Mihin Lanka, a budget carrier.

“The capital can be from a consortium of state institutions,” Rambukwelle told reporters.

The planned capital injection is about one percent of gross domestic product.

SriLankan plans to increase its fleet from the current 17 aircraft to 23 by 2014. Rambukwelle said both airlines are now managed together and a capital injection would allow them to bring down interest costs.

SriLankan Airlines chairman Nishantha Wickremasinghe has said earlier that the carrier has sought quotes from Boeing and Airbus to replace its ageing Airbus A340 aircraft.