SriLankan Airlines Told To Cancel Airbus Orders

April 26, 2016

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Sri Lanka's prime minister has instructed debt-ridden national carrier SriLankan Airlines to cancel four of eight Airbus A350 aircraft orders, and seek revival via a new international partner.

"We have ordered SriLankan Airlines not to go ahead with the deal for the four Airbuses for which manufacturing has not begun," Prime Minister Ranil Wickremesinghe said in a press briefing.

He said the government is determining whether there will be any cost of cancellation, and that SriLankan will continue to buy the other four aircraft which Airbus has started building.

The state-run SriLankan Airlines was a profitable 10-year joint venture with Emirates until the pair split in 2008. Mismanagement in the years since has left it with a debt of around USD$3.25 billion, the prime minister said.

"If it continues as it is, SriLankan will collapse which will have an adverse impact on the economy and tourism," he said. "We cannot allow that to happen. We have decided to seek a new partner."

The airline has bought seven Airbus A330-300s since 2012 to replace its fleet, before ordering the eight A350s.

It posted a group net loss of LKR16.33 billion rupees (USD$112.57 million) for the financial year to March 31, narrowing from the LKR31.37 billion rupees loss of a year earlier.

The carrier last posted a profit in 2009, a year after Emirates sold its stake in the venture.