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Losses sky high but Mihin Lanka seeks millions more
View(s):Wants Rs. 597 m to repair engines and return planes
The Cabinet has been called upon to approve more than Rs. 597 million to repair two aircraft engines of the Mihin Lanka budget airline which is incurring colossal losses. From 2008 to this year, official accounts of Mihin Lanka reveal a loss of more than Rs. 8 billion. It owes the Ceylon Petroleum Corporation a fuel bill of Rs. 895 million.
The Cabinet approval has been sought for US$ 2,780,000 or more than Rs. 361.4 million just to repair a leased Airbus A 321 (MSN 1946) aircraft engine and return it to its original owner. Aviation Minister Priyankara Jayaratne has told his colleagues in a memorandum that it was “a lease obligation” and that the engine had suffered a “surge” due to foreign object damage.
The repair of the engine is to be carried out by Lufthansa Technik Germany. Mihin Lanka, he has
said, has already lodged an insurance claim with a foreign company for the repair of this engine but payment is to be made only 30 days after the delivery, Jayaratne has said. Hence, Mihin Lanka has negotiated with Lufthansa Technik to pay fifty per cent of the cost and the balance once insurance is received. He has asked that the Treasury offers a guarantee of US$ 1 million (around Rs. 130 million) for the remaining fifty per cent.
Minister Jayaratne has also sought approval for the repair of an Airbus A 320 engine which had “failed bore scope test due to combustion chamber defects beyond serviceable limits.” The cost for this will be US$ 1,821,755 or over Rs. 236.8 million. It is to be carried out by MTU Germany.
According to Mr. Jayaratne, the money for the repair of the Airbus A 321 is to be obtained from the Bank of Ceylon as a long-term loan. He wants the Cabinet to approve a request to the Treasury to provide a security guarantee for this loan. This overhaul of this engine, Mr. Jayaratne has said, will be carried out by MTU Germany.
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