Airbus deal cost SriLankan US$400 million, minister reveals

Sri Lanka
By Editor_1
Engineers clean an Airbus 340 at the SriLankan Airlines maintenance hangar at the international airport in Katunayake on February 10, 2014. A controversial aircraft procurement deal involving Airbus a decade ago has cost SriLankan Airlines an estimated US$ 400 million, Ports, Shipping and Civil Aviation Minister Anura Karunathilaka revealed this week -Dinuka Liyanawatte/Reuters/File

COLOMBO – A controversial aircraft procurement deal involving Airbus a decade ago has cost SriLankan Airlines an estimated US$ 400 million, Ports, Shipping and Civil Aviation Minister Anura Karunathilaka revealed this week, underscoring the long-term financial damage caused by corruption and mismanagement at the national carrier.

Speaking on the losses incurred between 2013 and 2014, the Minister said SriLankan Airlines had entered into agreements to purchase A350 and A330 aircraft directly from Airbus as well as through leasing companies. None of the A350 orders materialized, with the airline later cancelling the contracts.

“We had to pay 115 million US dollars as penalties for cancelling contracts due to not having proper negotiations,” Karunathilaka said, adding that the procurement process had been deeply flawed.

He noted that the airline also acquired two older-model A330 aircraft at prices significantly above market value. “Two old A330 aircraft were acquired by paying 50 million dollars more than the market price. Due to this deal and its cancellation, SriLankan Airlines had to bear a cost of 400 million dollars,” he said.

According to officials, the inflated contract values resulted in higher-than-normal monthly lease payments for several years, further burdening the loss-making carrier.

The scandal first came to light after a joint investigation by Britain’s Serious Fraud Office and French authorities, which uncovered evidence of bribes paid in connection with Airbus’s aircraft sales to several countries, including Sri Lanka. Following the revelations, Sri Lankan authorities arrested then SriLankan Airlines Chief Executive Kapila Chandrasena and his wife in connection with the alleged misconduct.

Industry analysts and former officials have previously called on the government to explore legal options for seeking compensation from Airbus, arguing that the financial fallout continues to weigh heavily on the airline’s recovery efforts.

Procurement-related corruption has long been identified as a systemic problem within Sri Lanka’s state enterprises, contributing to persistent losses, weakened governance, and mounting public debt.

-ENCL

Editor_1
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