SriLankan Airlines Scandal: Corruption, Losses, and the Airbus Legal Battle

 

The Bribery Bombshell: Chandrasena’s Million-Dollar Kickbacks

The revelation that Kapila Chandrasena, former CEO of SriLankan Airlines, accepted a $2 million bribe from Airbus sent shockwaves across the nation. Despite the scandal, Chandrasena and his family now reside comfortably in Australia while Sri Lankan authorities scramble to secure his extradition. His involvement in corrupt deals has left a stain on the national carrier and raised questions about accountability in the country’s aviation sector.

A Financial Tailspin: Unprecedented Losses

The troubles of SriLankan Airlines extend beyond corruption. In just two years, the airline accumulated a staggering Rs. 448.7 billion ($1.5 billion) in losses. To put this into perspective, the amount is equivalent to half of Sri Lanka’s IMF bailout package or the cost of constructing infrastructure projects like the Hambantota Port and key expressways. This massive financial burden, sustained by the national treasury, is particularly alarming for a country still recovering from an economic crisis.

Legal Battles and Compensation Demands

Taking charge in the midst of this chaos, newly appointed chairman Sarath Ganegoda has initiated legal action against Airbus, demanding the return of pre-delivery payments amounting to $19.2 million—now inflated to $23.3 million with interest. Beyond this, SriLankan Airlines is seeking $200 million in compensation.

Ganegoda has proposed a settlement with Airbus, contingent on approval from the new NPP-JVP government. As part of this deal, he has requested four new Airbus A330-900 aircraft free of charge. The airline’s total claim against Airbus now stands at $232.6 million. This legal offensive is aimed at recuperating losses and repairing the airline’s tarnished reputation.

A Legacy of Corrupt Deals

In 2013, SriLankan Airlines entered an agreement with Airbus to purchase six A330-300 and four A350-900 aircraft. This deal was later found to be tainted with corruption, implicating Chandrasena and other undisclosed Sri Lankan officials. Despite a parliamentary admission by Deputy Minister Harshana Suriyapperuma about widespread corruption within the airline, industry insiders suggest that these revelations are merely the “tip of the iceberg.”

Adding to the airline’s financial woes, it has been paying $900,000 per month for three aircraft that have remained unused for years. Despite a budgetary allocation of Rs. 20 billion for the airline this year, officials have stated that these funds will not be used for operational costs.

Additional Demands from Airbus

Apart from compensation, SriLankan Airlines is pressing Airbus to negotiate settlements with Rolls-Royce and Thales Avionics over outstanding payments. The demands include:

Waiver of Rolls-Royce claims amounting to $26 million plus $11.4 million in interest for the cancellation of the Trent XWB engine agreements.

Waiver of an additional Rolls-Royce claim for $103 million plus $18.9 million in interest for the termination of four A350-900 aircraft.

Reimbursement of $2.2 million paid to Thales Avionics for canceled in-flight entertainment systems, along with $1.5 million in accrued interest.

Legal fees of $6 million incurred by SriLankan Airlines during its legal battle against Airbus.

International Scrutiny and Legal Precedents

In December 2023, the U.S. government sanctioned Chandrasena for his involvement in bribery, barring him and his family from entering the United States. Investigations revealed that Airbus had agreed to pay Chandrasena’s intermediaries up to $16.84 million in kickbacks, of which only $2 million was transferred. The UK’s Serious Fraud Office also exposed Airbus’ misconduct in a case heard at the Royal Courts of Justice in London.

The Future of SriLankan Airlines

With an ongoing legal battle, a demand for compensation, and new leadership pushing for transparency, the future of SriLankan Airlines hangs in the balance. The outcome of negotiations with Airbus could be a turning point for the embattled national carrier, determining whether it can recover from the financial abyss or continue to burden the Sri Lankan economy.