SriLankan Airlines deal – Tax payer to bear losses?

SriLankan Airlines deal – Tax payer to bear losses?

SriLankan Airlines deal – Tax payer to bear losses?

Written by Keshala Dias

13 Mar, 2017 | 9:10 pm

There is much discussion regarding the cancellation of a deal by SriLankan Airlines to purchase three A350 airlines.

On March 10, 2017, the Minister of Public Enterprises Development Kabir Hashim said:

“The cost for the cancellation of three A350 aircraft are as follows. The deposit placed for the three aircrafts amounting to US$ 7.5 million will be retained by the leasing firm AerCap.
A further US$ 146.5 will have to be paid in eight installments, with the final installment amounting to 56 million. However, there are some conditions if SriLankan Airlines pays the first seven installments without delay. If the lease on an aircraft that we already have – MSN 627  -is extended, and if the lease on the two narrow-body aircraft which were earlier operated by Mihin Lanka is transferred to SriLankan Airlines, AerCap has agreed to cut off the final installment of 56 million. Thereby, the final payment has reduced to 90.5 million”.

On March 5, The Sunday Times reported that Minister Kabir Hashim submitted a six-page Cabinet Memorandum on February 26, regarding SriLankan Airlines.

Through it, he points out that even though he was the Minister in charge, the SriLankan Airlines management had altogether ignored him.

According to The Sunday Times, the Memorandum also details how compensation of US$ 154 million for three Airbus A 350-900, ordered by the previous government was finally negotiated with International Lease Finance Corporation (ILFC).

This was after negotiations had gone on with the Dutch firm AerCap for many months and payment was approved for it by the Cabinet Committee on Economic Management.

The General Secretary of the Nidahas Sevaka Sangamaya of SriLankan Airlines speaking on the issue said:

[quote]”The lack of national policy for the national carrier has led to a situation where planes being purchased for their airlines, changes with a change in government. The public have to bear the losses incurred due to these actions. By cancelling the purchase of A350 aircraft, a hefty sum had to be paid as compensation. The loss has to be borne by the people. On March 10, Minister Kabir Hashim said that he is not aware of some activities that happen within SriLankan Airlines.

Then who should bear responsibility? If the cabinet minister says he is unaware about the deals that were reached, then government officials should reveal what exactly happened. As a trade union we call on the officials to provide a clear explanation to the public as well as the trade unions. Else, the tax payer will continue to bear the losses while the SriLankan Airlines employees will also be effected. So, we call on the officials to immediately reveal all details of what happened, else we will take stern action as a trade union.”[/quote]

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