Sri Lanka approves US$ 500 million loan to improve National airlines

July 28, Colombo: Cabinet has approved a proposal seeking to recapitalize the national carrier SriLankan Airlines and the budget airline Mihin Air with equity of US$ 500 million over five years on an annual basis commencing from 2012 to improve their operations.

The measure will allow the airlines to acquire new aircrafts, in order to cope up with the increasing tourist growth, the Minister of Mass Media and Information Keheliya Rambukwella said at the press briefing today.

The proposal made by Minister of Civil Aviation Priyankara Jayaratne seeks to increase the fleet of aircraft of the SriLankan Airlines from 17 to 23 by 2014.

SriLankan in April announced that it would acquire seven new aircraft within this year.

Minister Rambukwella said the national carrier at present has made operational profits and during the period the Emirates Airlines managed the airline no capital infusion has been made to improve the SriLankan Airlines.

Sri Lankan government bought back the 43.6 percent stake Emirates Airline held on SriLankan for US$ 55 million last year.

Referring to the loss-making budget airline Mihin Air, the Minister said a low-cost airline is needed to cater to around 250,000 Sri Lankans employed abroad who cannot afford to fly in normal airlines. He pointed out that the Mihin Air operation is interrelated with foreign employment, and carrying out a service to Sri Lankans employed overseas.

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