Apr 19, 2010 (LBO) – Sri Lanka’s controversial state-run budget carrier Mihin Lanka lost 930 million rupees in 2009, despite support from the island’s national carrier SriLankan, which itself made 12.2 billion rupees in operational losses, official data shows.
After starting in 2007, Mihin Lanka burnt up its start-up capital given from people’s money and notched up losses of 1.4 billion in nine months.
Mihin folded in May 2008 with an estimated 3.0 billion in debt and losses but was re-started in January 2009 with another cash injection from people’s money.
The airline is now sharing services with SriLankan including pilots. There is no information available on the cross-subsidy given by SriLankan to Mihin and how much of its 12.2 billion operational loss is due to the burden of the budget carrier.
SriLankan ran without support from people’s money after it was privatized and handed over to Emirates airline in 1998.
A finance ministry report showed that the state has issued guarantees for 2.7 billion for Mihin Lanka and Sri Lankan to borrow from state-run Bank of Ceylon.
A credit guarantee for 1,552.5 million rupees was related to Mihin and SriLankan’s loans got a ‘comfort letter’ for 1,150 million rupees, the report showed.