Govt. insists UL-AerCap deal to cancel A350s was in country’s best interests

Friday, 24 February 2017 00:00 - - {{hitsCtrl.values.hits}}

Minister Kabir Hashim says decision will save over $ 200 m for SriLankan Airlines
Expertise from aviation industry specialists Nyras and Skyworks sought before final decision
Cancellation penalty of $ 154 m negotiated down to $ 98 m; denies Joint Opposition allegations
Claims corrupt MR regime struck deal for $ 1.425 m per month per aircraft lease when market rates were $ 0.9 m

The Government this week reiterated that the deal to scrap the national carrier’s order for four Airbus A350-900 was in the country’s best interests, saving it over $ 200 million.

Issuing a statement in response to Joint Opposition allegations, Public Enterprise Development Minister Kabir Hashim denied that the Government was planning to pay $ 154 million to the world’s largest airline leasing company, AerCap , for the cancellation of four commercially unviable Airbus A350s ordered by SriLankan Airlines.

“When the Government decided to cancel the lease agreement of the four Airbus A350-900s, AerCap had requested $ 154 million as a penalty. However, the Cabinet of Ministers directed SriLankan Airlines to negotiate the cancellation fee to $ 75-85 million,” Minister Hashim said. Subsequent negotiations saw the amount reduced to $ 98 million.

The Minister said this was a considerable saving, considering the fact that if the order was not cancelled SriLankan Airlines would have incurred a loss of over $ 205 million for the lease period of 12 years.

He said that the original deal was highly unfavourable for Sri Lanka. “When there was an opportunity to hire these aircraft for $ 950,000 per plane per month, the corrupt Mahinda Rajapaksa regime had leased it for $ 1.425 million per aircraft per month,” the statement claimed.

Apart from acquiring these aircraft at exorbitant rates, the Airbus A350-900s were not commercially viable for SriLankan Airlines’ route network and future business plan, the Minister revealed. The statement also said that in arriving at the cancelation, the Government had received expertise from aviation industry consultancy firms Nyras and Skyworks.

“By cancelling an unfavourable deal and negotiating a lower fee, the Government has only acted in the best interests of the airline and the people,” the statement by Minister Hashim emphasised. It also said that there had not been any differences of opinion between Finance Minister Ravi Karunanayake and Minister Hashim over the Cabinet paper presented to this effect.