Aircraft worth Rs. 146 bn bought by UL violating procurement guidelines

A former CEO of SriLankan Airlines, Kapila Chandrasena had continued the agreement with Airbus in 2013 to purchase an aircraft worth Rs.146.1 billion for re-fleeting. 

This was despite the head of finance informing them that there was a bad cash flow position in SriLankan Airlines during that time, the Presidential Commission of Inquiry into irregularities at SriLankan Airlines, SriLankan Catering and Mihin Lanka was told today. 

Head of Finance at SriLankan Airlines, Yasantha Dissanayake informed the commission that a former Chairman, Nishantha Wickramasinghe, had signed a Memorandum of Understating (MoU) with Airbus to purchase aircraft for re-fleeting, violating the procurement guidelines and also without considering the bad cash flow of the company. 

“According to the procurement guidelines of SriLankan Airlines, the chairman has no authority to sign MoUs. It was the CEO who has the authority to perform such action,” he said.

Dissanayake also informed the commission he had suggested the SriLankan Board of Directors to consider an affordable re-fleeting structure. Earlier it was revealed to the commission that SriLankan only had assets worth Rs. 89.4 billion when the company came to an agreement with Airbus in 2013, worth Rs. 146.1 billion. 

It was also revealed that the decision taken by SriLankan to purchase four Airbus A350-900 and lease another four amounted to more than 50% of the total SriLankan assets in 2013. Article 184.2 of the Company Act and the articles of association of SriLankan state that a resolution needs to be adopted by the board of directors when such a major transaction is to take place. 

Earlier, Dissanayake informed the commission that while the government capital infusion which commenced in 2012 had improved their balance sheets, the financial status of the airline was dire. (Yoshitha Perera)