SriLankan in talks with AerCap to offload three A350s

Friday, 9 September 2016 00:01 - - {{hitsCtrl.values.hits}}

By Uditha Jayasinghe

Debt-ridden national carrier SriLankan is in discussions with the world’s largest airline leasing company, AerCap this week to cancel lease orders for three Airbus A350 aircraft, as they do not fit into existing routes and are too expensive to operate.

The team from Dutch aviation company AerCap reached Colombo on Thursday, according to sources, for the latest round of discussions with SriLankan Airlines to find solutions to three A350 aircraft. One of the A350 aircraft has already been offloaded with a penalty of $17.5 million and the national carrier is hopeful they would be able to negotiate the same terms for the remaining three aircraft as well.

“SriLankan cannot operate them. We simply cannot afford them, they are too expensive and we cannot hand them over to another party,” SriLankan Chairman Ajith Dias told reporters on Wednesday.

“An international partner would strengthen SriLankan airlines because we need, more than anything else…. we hope they will come with some money. Our biggest problem is our carry forward debt. If not for the debt running this airline would be no big deal. In fairness the Government cannot keep subsidising this airline.”

SriLankan is to take delivery of the first A350 aircraft in October. Public Enterprise Reforms Minister Kabir Hashim admitted to Daily FT on Monday that the Government is at a loss on how to make use of the aircraft, which is usually used for long-haul routes that are not currently operated by SriLankan Airlines. Four other A350 aircraft that SriLankan Airlines was to take delivery of in 2019-2020 would be cancelled by the Government, Prime Minister Ranil Wickremesinghe said in April.

Seven A330 aircraft and eight A350s were ordered during the previous Government of former President Mahinda Rajapaksa when his brother-in-law ran the national carrier in a $2.6 billion deal. Of the A330’s one aircraft has already been handed over to Pakistan International Airlines (PIA) with two more to follow in the coming months. SriLankan is also considering expanding their engineering services both in Katunayake and Islamabad with the support of PIA.

Minister Hashim also said SriLankan Airlines has received 10 Expressions of Interest (EOIs) from prospective international partners and a special committee has been appointed to whittle them down to three or four options before the Government kicks off formal negotiations.

AerCap is the world’s largest airline leasing company with 1,640 owned, managed or on order aircraft in its portfolio and serves approximately 200 customers in 80 countries.