SriLankan Airlines has been coerced
by the government into providing a
bailout package, which will give Mihin
Lanka another fresh lease of life,
despite the budget carrier having
recorded a Rs. 3.2 billion loss.
confirmed to The Sunday Leader
that it will be procuring a narrow
bodied aircraft to be wet leased to
The airline in an
official statement released to The
Sunday Leader said, "SriLankan
Airlines is presently in discussions to
wet-lease a twin-engined Airbus A320
aircraft to Mihin Lanka from April 2009.
"The agreement is to
be on commercial terms, with payment to
be made to SriLankan on an up-front
basis. Subject to this, Mihin Lanka will
obtain an Airbus aircraft and crew
suited to its current operations at a
cost effective, financially viable way.
The wet-leasing of aircraft includes the
services of pilots."
Mihin Lanka, Kapila Chandrasena however
claimed he knew nothing of the deal.
Chandrasena, is not only Acting
Chairman, Mihin Lanka but also on the
Board of Directors of SriLankan
Airlines. Chandrasena however said he
could not speak for the government.
At a high level
meeting Chaired by Ports and Aviation
Minister Chamal Rajapakse, held on
Wednesday, February 18, SriLankan
Airlines agreed to procure an aircraft
to be wet leased to Mihin Lanka.
Meanwhile The Sunday
Leader has reliably learnt that
Chandrasena was lying when he denied any
knowledge of the deal to this newspaper
as unimpeachable sources confirmed that
the Acting Chairman was indeed present
at the crucial meeting where the
modalities of the agreement were
The deal with
SriLankan is not without conditions.
Mihin Lanka has to pay US$ 8 million
(approx. SLR 896 million) up front as a
The government is to
also pay the existing debt obligations
of Mihin Lanka to SriLankan Airlines
amounting to US$ 1.35 million (approx.
SLR 151.2 million)
Mihin Lanka is to
carry out its own commercial operations.
The budget carrier has also been told to
submit a Business Plan as a condition
precedent to enable SriLankan Airlines
to calculate wet lease charges.
will hold the right to nominate up to
two Directors including the Managing
Director/CEO to the Board of Mihin
Lanka. This condition is to ensure
payments to SriLankan are protected.
The wet lease charge
is for one year and will include
aircraft lease rental as well as crew,
maintenance, and insurance.
Flight routes and
schedules of Mihin Lanka and SriLankan
are to be coordinated to ensure that no
cannibalization of traffic occurs.
Mihin Lanka will
remain as a separate company as a merger
into SriLankan Airlines cannot be
considered yet, due to opposition from
which continues to hold a 43.6%, share
in UL and thus have two Directors on the
Board have not been consulted.
The two Directors,
Tim Clark and Gary Chapman have not
attended a single Board meeting at
SriLankan since Emirates decided not to
renew its Shareholder’s Agreement last
Chief Executive Officer for SriLankan
was overseas when contacted by The
Sunday Leader. Gunawardena confirmed
that the deal was indeed sealed on
Wednesday, February 18. He said
SriLankan would lease the aircraft to
Mihin at regular commercial rates.