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Mihin Lanka to merge with parent airline SriLankan
October 7th 2016
Sri Lanka’s national budget carrier, Mihin Lanka, will cease operations on October 30 and merge with its parent, oneworld member, SriLankan Airlines. Read More »
"This decision has been made by the government of Sri Lanka, as part of the long-term strategy to restructure the local aviation industry and strengthen the national carrier’s offering and efficiency," SriLankan CEO, Suren Ratwatte, said and added Mihin Lanka’s three aircraft and 300 staff would be absorbed by the flag carrier.
Inaugurated in 2007, Mihin Lanka has scheduled flights to eleven destinations, including Bahrain, Dhaka, Jakarta, Kolkata, Muscat, the Seychelles and Varanasi.
Separately, Colombo this week cancelled its contract with AerCap for four A350-900s destined for SriLankan. “The loss from purchasing these four A350s would have been 900 million rupees per month. If we did not reject this it would have come to our accounts,” Ravi Karunanayake, Minister of Finance said, and added “what the country needs are buses and not air buses”. He said he re-negotiated the cancellation penalty from approximately $160 million to $100 million.
SriLankan has not reported profitability since 2009 with its accumulated debt in the last seven years reported to exceed $3 billion. For the financial year ended March 31, the carrier had a net loss of $113 million. The haemorrhaging triggered a strategy change at SriLankan from long-haul operations to a renewed regional focus, particularly in India and China.
An all-Airbus carrier, SriLankan ordered eight A350s and seven A330-300s in 2013. After accounting for the four cancelled A350s, it has four of the XWBs on direct order with Airbus. The manufacturer confirmed to Orient Aviation the order remains in the books, with deliveries expected from 2020.
SriLankan struck a deal with Pakistan International Airlines over the summer to wet-lease the seven new A330s to Islamabad for a reported daily lease fee of $88,000. SriLankan also has six A320neos on lease from 2017.
Sri Lanka's minister for international trade and development strategies, Malik Samarawickrama, this week said U.S. private equity firms, BlackRock and TPG Capital, have formally expressed their interest in the carrier, following previous proposals from several Mainland carriers, including conglomerate, HNA Group.
