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Colombo: Sri Lanka has cancelled half its order for eight Airbus A350 planes as its cash-strapped national carrier struggles with mammoth debts, the prime minister said Tuesday.
Ranil Wickremesinghe also said the government had decided to take on state-owned SriLankan Airlines' $3.25 billion debt and restructure the airline as a joint venture with private capital.
The government may face penalties for cancelling the airline's purchase of four unbuilt planes, which were part of a $2.3 billion deal made under the previous administration and alleged to have involved corruption.
The other four planes are scheduled to be delivered from August but the prime minister suggested the government would try to sell them.
"We have to see how we can dispose of the four (being delivered)," Wickremesinghe said.
"They (Airbus) have not started manufacturing the other four. We told them that we are not going ahead with those."
The previous government of strongman president Mahinda Rajapakse in 2013 agreed a deal for SriLankan Airlines to buy seven A330-300 planes, which have been delivered, as well as the eight A350s.
The airline's current losses are estimated at 128 billion Sri Lankan rupees ($872 million) on top of its massive debt.
SriLankan Airlines was profitable before Rajapakse cancelled a management agreement with Emirates airline in 2008 following a personal disagreement.
SriLankan had refused to bump fare-paying business-class passengers down to economy class and give their seats to members of Rajapakse's family, who were returning from London.
An angry Rajapakse removed the Emirates-appointed CEO of SriLankan Airlines from his post and replaced him with his own brother-in-law, who had no airline or corporate experience.
A mounting debt crisis of its own has forced the Sri Lankan government to request a bailout from the International Monetary Fund, expected to be more than $1 billion.
AFP
