Sri Lanka’s state airline may have to cancel A350 orders: Minister
ECONOMYNEXT – Sri Lanka’s state-run SriLankan Airlines may have to cancel some of the Airbus A350 aircraft ordered by the ousted Rajapaksa regime paying a penalty, which make the airline suffer losses of 955 million US dollars, a minister has said.
Many of SriLankan Airlines long-haul destinations to Europe is suffering losses, partly due to the use of old aircraft but also due to competition from privatized European airlines and Middle Eastern carriers which are owned by feudal rulers who run airlines on private sector lines.
Though many of SriLankan Airline’s short-haul Indian and far eastern routes are making profits European routes are loss.
State Enterprises Development Minister Kabir Hashim said long-haul routes were making loss.
"Though we have ordered (A350s), we do not need them," he told parliament. "We have to pay 50 million dollars to cancel the order. Whose money is this?"
Some of the aircraft had already been delivered. A350 production slots have some demand and it is not clear whether any attempt has been made to trade them.
One of the aircraft had a kit to convert business class to a super luxury airborne suite, which Present Maithripala Sirisena cancelled soon after coming to power.
SriLankan Airlines was running profitably until ex-President Mahinda Rajapaksa cancelled a management and equity partnership with Emirates, reportedly after some of his entourage was put on separate flights, sending the airline into a tale-spin.
His brother-in-law was appointed chairman.
Losses up to March 2015 totalled 955 million rupees, Hashim said. A 500 million dollar tax-payer bailout was arranged out of which 375 million has been given, Hashim said.
Lower fuel prices have brought some benefits to the airline this year. Meanwhile the airline had said it may cut some ‘vanity routes’ to save money.
During the last regime attempts to cut a loss-making run to Rome was reportedly thwarted by President Rajapaksa at the behest of a religious leader. Sri Lanka’s hoteliers have are also pressuring the airline run direct flights to Europe to boost their own profits. (Colombo/Dec29/2015)