Oct 25, 2017

Airbus aircraft deal cancellation triggers major legal issue

The Sri Lankan government faces a major legal issue of breach of contract on the purchase of purchase of four Airbus A 350-900 aircraft ordered during the previous Rajapaksa regime.

The government had already made an initial payment to France based ‘Airbus’ for the four aircraft.

Although Sri Lankan Airline has wrote to Airbus informing the cancellation of the order, it cannot be accepted as an official notification, Sri Lankan airline experts said.

In 2013, the then-government of Mahinda Rajapaksa signed an agreement to purchase a total of eight A350-900 Airbus aircraft.

However the order placed for four aircraft was canceled by the present government and it was forced to pay a compensation amount of over US$ 90 million for calling off the agreement. The four aircraft are to be delivered in 2019/2020.

The government is currently in a multi-million dollar dispute with Airbus over the purchase of four Airbus A 350-900 aircraft ordered during the previous Rajapaksa regime.

National carrier SriLankan Airlines has already paid pre-delivery payments for these aircraft running into US dollar millions but the airline’s director board in November 2016 decided to stop making these payments.

The Criminal Investigation Department (CID) detectives are now probing how this purchase deal under the previous Government came about.

In addition to the purchase of four Airbus A 350-900, SriLankan Airlines also obtained on lease four more. The lease has now been terminated with a controversial payment of US$ 146.5 million.

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