COPE asks...

on Public Enterprises (COPE) Chairman and Senior Minister D.E.W. Gunasekara had told the senior officials of Mihin Lanka, which had incurred a massive operating loss of Rs.119 billion up to last year, to re-examine and replan its flying routes to mini- mise losses.

The minister has told the top management that doing business on borrowed capital instead of its own raised capital had been identified by COPE as the fundamental factor that has contributed to the huge losses.

The Sri Lanka Treasury has funded the loss-making airline from 2010 to 2013 with payments totaling to Rs.8,003 million without any returns whatsoever.

COPE asked new chairman, Nishantha Ranatunga to prepare a new business plan for the next five years (2015 – 2019) and submit it to the committee. He was also advised to consider a change in the Mihin Lanka aviation policy in consultation with the Ministry of Ports and Aviation.

Mihin Lanka (Pvt.) Ltd officials were summoned by COPE on Thursday with newly appointed Chairman Nishantha Ranatunga being present.The minister asked where the previous chairman was and that he should have appeared before the committee. However, he made his appearance later.

At the previous COPE inquiry it was revealed that the operation losses of the company had escalated to Rs.3,293 million in 2012/2013 from Rs.540 million in 2010/2011.

He has been asked to identify the factors that contributed to the huge losses and to report to the committee how they propose to salvage Mihin Lanka because the recurring loses had reached unaffordable limits.

COPE examined in detail the performance of its flying routes -- Dha- ka, Medan – Indonesia, Jakarta, Madurai, Bahrain, the Seychelles, Varanasi and Sharjah. It was disclosed that the cost of aviation fuel, leasing of aircraft and marketing costs had increased by 112%, 75%, 117% and 309% respectively between 2010 and 2013 aggravating the losses.

The possibility of amalgamating the two airlines, which had come up as a suggestion at two consecutive COPE meetings was also raised. The CAO/AO said this matter had not been discussed by the board of directors as the matter was beyond the scope of the institution.