The Sri Lankan government is set to pay independent aircraft leasing company AerCap Holdings NV US$170 million to cancel a lease for four Airbus A350s, according to a report by Reuters. The lease was originally signed by the previous administration.

Speaking to parliament yesterday, Finance Minister Ravi Karunanayake said that state-run Sri Lankan Airlines does not require A350 aircraft, owing to its longest journey being approximately 10 hours. The government also has an order for four other A350 aircraft with Airbus, scheduled to be delivered around 2020, however the future of these orders is unclear.

Sri Lankan Airlines has been struggling financially and while its group net losses of US$113 million for the financial year through March 31 are down from its previous year’s loss of US$215 million, the airline currently has a debt of approximately US$3.25 billion. The carrier last posted a profit in 2009, according to the report.

The current administration has been taking steps to reduce losses by the national carrier, along with attempting to secure a partner to revive the airline.

The government also announced that it will be discontinuing its budget carrier Mihin Lanka, effective October 30, which has also been struggling. As of January 31, the airline had posted an accumulated loss of more than US$116 since its inception in 2007.

Sri Lankan Airlines will be taking over the budget carrier’s 11 routes as part of the restructure, and will operate them as a full-service rather than budget offering.

The cancellation of the A350 aircraft lease follows the airline’s plans to lease four of its own A330 aircraft to Pakistan International Airlines Group, announced earlier this year. The move came after decisions to cancel its long-haul flights to Frankfurt, Paris and Rome, which will terminate over the coming months.