Mihin Lanka (Colombo International) and its sister carrier, SriLankan Airlines (UL, Colombo International), are to be merged into a single entity as part of the new Sri Lankan government's plans to cut down on unnecessary expenditure.
Presenting the country's interim budget late last week, Finance Minister Ravi Karunanayake said consolidating the two carriers into one company would cut losses while increasing productivity.
Mihin, a state-backed budget carrier operating flights to the Indian Sub-continent, the Middle East, and South East Asia, has racked up LKR15 billion (USD113.37 million) in losses since 2010 while its full-service counterpart, SriLankan, has lost LKR100 billion (USD755.8 million) over the same period, he said.
In their defence, both airlines have blamed their dismal financial performance on "high fuel costs, less than satisfactory yields due to the recession in Europe, competition from other airlines, significant investments in acquiring additional capacity and enhancement of supporting services including the cabin upgrades."
In an effort to bolster the airlines' coffers and cut the country's debt bill, President Maithripala Sirisena last week cancelled a USD16 million order for a new VIP jet with the money to be used to buy spare parts for SriLankan and Mihin Lanka's aircraft.
