Sri Lanka`s Mihin Air seeks cash, merger
May 30, 2008 (LBO) Sri Lanka`s grounded state-run budget airline has sought an 800,000 dollar cash infusion from the Treasury and may be merged with the national carrier, as part of a restructure plan, officials said.
Mihin Lanka, which has been dogged with financial problems since it began commercial operations last year, has suspended services after running up debts to nearly 15 million dollars.

Operations are currently on hold due to lack of planes as the last aircraft, an Airbus A321, was reclaimed by its Bulgarian owners late April.

Cash Crunch

`We had to give that (A321) plane up, because we didn`t have money to pay the lease,` Mihin`s chief executive, Sajin Vaas Gunawardene told reporters Fridays.

Gunawardene said he gave his resignation to the airline`s board yesterday, but has sought a cash infusion and a Treasury guarantee to secure another aircraft on a lease to resume operations.

`We are negotiating with three parties, some French partners, to get an Airbus A320 on a dry lease, the aircraft is 17-years-old.... we are confident the treasury will help us, to resume commercial operations in July,` he said.

Current Sri Lankan civil aviation restricts aircraft over 15-years from being used for commercial operations. But Gunawardene alleges the government has agreed to amend the laws to raise the aircraft age limit to 21-years.

Officials from the Civil Aviation department, the government`s airline regulator, were not immediately available for comment.

The restructuring plan includes the government picking up the 647,000 dollar tab to lease the aircraft for two months, plus another 100,000 dollars to resume operations.