Costs Srilankan Rs.110 Mn a month

Srilankan airlines is paying Rs.110 million a month for a grounded A330-200 aircraft which it acquired after the cancellation of the lease on three A350-900 airbuses in 2016/2017, the Presidential Commission of Inquiry (PCOI) into irregularities at Srilankan airlines was told yesterday.

Srilankan’s Group Internal Auditor Mahesh Nanayakkara informed the Commission that he airline was paying Rs.1.3 billion a year for this grounded aircraft.

“Srilankan airlines has incurred a loss of Rs.14.3 billion because of the cancellation of three A350-900 Airbuses and part of the losses was during the financial year 2016-2017. During this period, Srilankan had to acquire a A330-200 aircraft which is still grounded and the airline had to pay a large amount of money a month even without using it,” Senior State Counsel Fazly Razik told the PCOI.

When leading the evidence it was also revealed that the amount which Srilankan has been paying every month is not reflected in Srilankan airlines cash flow statements.the witness said the decision to acquire the three Airbuses A350-900 was taken in 2013 and Srilankan airlines had hired ‘Seabury’, a famous international aviation consultancy firm as an external consultant to the Company that year.

The Senior State Counsel asked the witness whether Seabury did not advice Srilankan on the acquisition of these aircraft, as Seabury had partnered with the Airbus Company during several aircraft arrangements previously and would have had the knowledge to do so.

However, witness was unable to provide a proper answer to the question but informed the PCOI that as the Group Internal Auditor he was not aware that Seabury consultants provided the proper market rates at the time to Srilankan Airlines.

COPE report stated that Aercap company from which Srilankan was leasing the Airbuses had initially asked the company to pay a penalty of US$115 million in lieu of terminating the agreement. However, Aercap had agreed to reduce the penalty to US$98 million based on several conditions.