Airbus representatives to visit Sri Lanka to negotiate termination of A350-900

• Legal firm to represent SriLankan appointed

By Chathuri Dissanayake

SriLankan Airlines expects representatives of Airbus to visit the country to negotiate the termination of four A350-900 Airbus aircraft – the second part of the $2.5 billion re-fleeting program initiated under former President Mahinda Rajapaksa for the national carrier, a top official said.

The Cabinet Committee on Economic Management (CCEM) has yesterday approved the SriLankan board’s selection of a law firm to negotiate the exit terms.

“We are trying to negotiate the terms in a way that won’t requires us to pay compensation as we did before. But we’re not sure how it will pan out,” Public Enterprise Development Ministry Secretary Ravidra Hewavitharana said.

The four A350-900 Airbus aircraft with fly capacity of over 15 hours are no longer needed by the carrier which has shed all its European destinations except for London over the years.

A steering committee headed by Prime Minister Ranil Wickremesinghe is overseeing the issue and the restructuring of the airline. The committee comprises Minister of Special Assignments Sarath Amunugama, Civil Aviation Minister Nimal Siripala De Silva, Development Strategies and International Trade Minister Malik Samarawickrama, Finance Minister Mangala Samaraweera and Minister Kabir Hashim. This is the latest ministerial committee to be appointed to monitor the affairs of the troubled airline. Earlier, another ministerial committee comprising Minister Amunugama, Foreign Minister Thilak Marapana and Minister Samaraweera was discussing the issue. However, this committee has now ceased to function. The officials’ committee headed by Hewavitharana still functions and is studying the situation to furnish a comprehensive report and recommendations to the Ministerial committee. This committee met yesterday to discuss the way forward, Daily FT learns.

The first four aircraft were cancelled by SriLankan earlier after paying a fine of $98 million. Four remaining aircraft, which were to be taken delivery of in 2019/2020, will be cancelled under this latest round.

The Committee on Public Enterprises (COPE) also called on the Government to take action without further delay to terminate the ordered aircraft as the manufacturing process by Airbus was scheduled to start at the end of September.

The SriLankan board has already written to Airbus informing them of the decision to terminate the order after the officials’ committee decided to terminate the contract.

Further, the Ministerial committee has taken up the task of finding a suitable investor to form a Public Private Partnership with the airline.

An earlier attempt to find a suitable company through international competitive bidding failed as three shortlisted bidders pulled out halfway through negotiations. Subject Minister Kabir Hashim subsequently announced that the Government will be approaching different airlines to negotiate a favourable deal for the national carrier, but have yet to make a breakthrough.