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UL eyes Airbus payback


Feb 20, 2020

Sri Lanka Airlines (SLA) is in consultation with the Attorney General’s (AG) Department to initiate legal action to recover the maximum possible amount in compensation from Airbus company which is at the centre of a bribery scandal but Sri Lankan is also looking to procure two widebody aircraft from the company to operate long haul flights, Chairman Ashok Pathirage told the Parliamentary Committee on Public Enterprise (CoPE) yesterday. 

“I cannot divulge all the information on the ongoing process as the information is very sensitive and if I give you all the information out here today it will be detrimental to us in terms of what we are trying to claim from Airbus. We believe there is an opportunity to recover at least part of the money from the company,” Pathirage told the Committee. 

The Chairman and the entire Board of Directors of the airline were summoned to be present at the CoPE hearing on the SLA-Airbus bribery case, the unravelling of which during a UK court hearing into Airbus company’s practice of bribing airlines in several countries led to the arrest of SLA former CEO Kapil Chandrasena and his wife.

Pathirage said that SLA will put its best effort through legal means to collect this money while also pursuing action initiated with the Commission to Investigate Allegations of Bribery and Corruption (CIABOC) to explore the possibility of claiming some of the money awarded to the UK by Airbus as compensation as the bribe offered to SLA official too were included as charges in that case.

Pathirage also told the Committee that the airline would be recommencing two long haul routes, namely to Amsterdam and Sydney for which the company needs to procure two widebody aircraft.

“We are not buying as we don’t have the money, but we will be procuring leasing them the same manner the earlier A350 were procured. Given the situation today we can procure the aircraft for much lower, around $ 300,000 to 400,000 per month but we have inherited seven aircraft for which we have to pay $ 1 million each month which adds up to $ 7 million but we are under contractual obligation to pay this till 2022 even though the same aircraft are now available in market at $ 300,000 to 400,000.” He said market prices at the time the aircraft were procured might have been higher.

Pathirage said when the SLA re-fleeting as done in 2013, quotations were also called from Boeing company but as SLA is a small airline company operating with a fleet of only 26 aircrafts, it is cost saving to but procured from Airbus as it can save on training spare parts etc.

“For a small airline like ours, it is prudent to work with Airbus. The aircraft we are leasing are three to five years as we are not in a position to buy brand-new aircraft,” Pathirage added saying that the A350 aircraft procured earlier were not suitable for SLA. “Those are long haul aircraft and what the technical people say is that they are not very fuel efficient.” He added that Airbus is very flexible and are willing to give different aircrafts more suited to the local airline.

Meanwhile CoPE Chairman MP Sunil Handunnetti said that with the consent of all the members of CoPE, he has decided to forward the Auditor General’s reports on the lease agreement and termination of Airbus leases as well as all minutes of the Committee meetings on SriLankan to the Attorney General’s Department directly to pursue legal action.

“We will send these directly to the AG. If anything, illegal has happened those responsible must be punished,” Handunnetti said urging Pathirage to fully cooperate with the AGs investigation. The SLA Chairman said they will fully support any Government institution investigating irregularities at the airlines.

It was revealed to the Committee that SriLankan Airlines Airbus Deal of $ 2.8 billion has been carried out without any consultation of the AG but only on the advice of private counsel retained by the airline. It was also revealed that the public had been made to believe that SLA had managed to reduce the penalty for the cancellation of an agreement to purchase four A350-900s from AerCap Company, the aircraft leasing company. 

AerCap agreed to reduce the penalty to $ 98 million under four conditions. The conditions were paying every instalment on the agreed date, extending the lease period of A330-200 MSN 627 aircraft by 10 years, implementing a lease agreement for A330-200 MSN 1008 aircraft and transferring to SriLankan Airlines two narrow-bodied aircrafts belonging to AerCap company that had been leased to Mihin Lanka.  Ultimately these costs have come to over $ 150 million.

The other Committee members yesterday were Minister Susil Premajayantha and MPs Ajith. P. Perera, Wijeyadasa Rajapakshe, Harsha de Silva, and Ashok Abeysinghe. (Source: Daily FT)

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