Rs. 13.5 bn to bail out SriLankan Airlines

Two state banks – the Bank of Ceylon and the People’s Bank – will extend financial assistance of Rs.13.5 billion to bail out the cash-strapped Sri Lankan Airlines, it is learnt.

Public Enterprise Development Minister Lakshman Kiriella submitted the Cabinet memorandum in this regard. Earlier, the bank interests, accrued over a period of time, accounts for a bulk of the total losses of the national career.

It is learnt that the two state banks will issue the Letters of Comfort in this regard soon.

However, Finance Minister Mangala Samaraweera, in his observation on the Cabinet paper, has stressed the need to restructure the national career or to find a new investor for the development of it. He is reported to have said that this will be the last time for the State banks to give such financial assistance.

SriLankan Airlines lost US$ 105 million of Rs.16 billion for the last financial year. The International Monetary Fund (IMF) also recommended the government to restructure the national career.

A top-level committee, appointed by the government to look at the financial situation of the airline, has recommended the fleet and route rationalization along the laying off of the staff.