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The national carrier, SriLankan Airlines has negotiated with underwriters to cover their war risk of US$ 1.5 billion, a company spokesman said.

Last week the airlines' reinsurers reduced their war risk cover of US$ 1.5 billion to US$ 50 million, leaving the airline to bridge the gap with an alternative cover for the balance US$ 1.45 billion.

The international insurance committees decision to limit their war risk cover on the airline industry following the terrorist attack in the US put the global aviation industry in a quandary and even forced some airlines to ground their fleet until an alternative cover was arranged.

Like most of the other international airlines, SriLankan airlines sought the assistance from the Government of Sri Lanka who readily came up with an indemnity for US$ 1.45 billion as a temporary measure.

In a reversal of their earlier decision, the international insurance industry has removed the ceiling of US$ 50 million on the war risk cover. This move has enabled SriLankan Airlines to arrange the war risk cover required by the financiers of their aircraft.

The airline has relieved the Government of Sri Lanka of its liability of offering an indemnity of US$ 1.45 billion war risk cover to the airline. 

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