Three new Airbuses: Govt. faces financial turbulence, but no action against culprits

It is easily one of the worst losses suffered by the Government but it had little or no say over the issue. The Cabinet Committee on Economic Matters (CCEM) has decided to negotiate the “termination loss” for a SriLankan Airlines order in February 2013 for three brand new A 350-900 aircraft for “anything between US$ 75 million to 85 million” or between more than Rs. 10.99 billion and Rs. 12.45 billion. The new aircraft ordered by the previous management were due for delivery in 2020/21.

The decision was made at a CCEM meeting chaired by Prime Minister Ranil Wickremesinghe. It came after Public Enterprise Development Minister Kabir Hashim briefed the committee recently.

Despite the colossal losses that would be incurred, the Government has still not been able to determine who was responsible for the controversial purchases. It has also not been able to determine who during this period represented the French Airbus Industrie, the manufacturers of the aircraft and Britain’s Rolls Royce, whose engines were to be fitted on them.

The projected “termination loss” is not the only expenses incurred by the Government. In December 2013, the then Civil Aviation Minister Priyankara Jayaratne obtained approval of the then Cabinet of Ministers to make “pre-delivery payment” to Airbus Industries for deliveries of aircraft.

He said, “In order to obtain medium term financing, the Board of Directors from SriLankan Airlines has approved the issue of a Bond in international markets with a view to raising US$ 175 million to be re-paid at the end of five years. Accordingly, SriLankan Airlines requires the Treasury Guarantee issued to Mashreq Bank (Dubai based) cancelled and re-issued to guarantee the bond issue of US$ 175 million.

“SriLankan Airlines needs to repay the Mashreq Bank loan outstanding amounting to US$ 130 million in order to cancel the present guarantee of US$ 175 million issued to Mashreq Bank. The Board of Directors of SriLankan Airlines has appointed Standard Chartered Bank as lead bank and arranged for US$ 150 million syndicate loan which will primarily be used to repay the Mashreq Bank syndicate loan. The new loan requires Treasury guarantee for only 33 percent of the loan value and therefore SriLankan Airlines is seeking a new Treasury guarantee of US$ 50million to raise this facility.”

As is clear from the then Minister Jayaratne’s memorandum, the then SriLankan management has gone from bank to bank to borrow money for a purchase which had lacked transparency. Now the National Unity Government has been forced to bear the accumulated loss.

While former Government leaders are being taken in for the abuse of state vehicles – and remanded, those responsible for these colossal losses go scot free and the top management of the national airline seems to have taken little or no interest in pursuing the culprits. Even the halfbaked inquiry report commissioned by the new Government into the airline gathers dust with no interest other than to say; “we have handed it over to the Attorney General”.