‘Shocking’ Airbus scandal spurs SriLankan to pursue compensation

The government of Sri Lanka is considering ways of recovering damages, including claiming compensation from Airbus SE, after the European planemaker admitted to bribing executives to win aircraft orders.

“The reputational damage was huge, enormous,” Vipula Gunatilleka, chief executive officer of state-run SriLankan Airlines Ltd., said in an interview at the Singapore Airshow on Wednesday. “That’s why our government is looking at certain remedial action.”

Airbus two weeks ago admitted to illegally trying to sway plane sales and agreed to a record $4 billion bribery settlement. That included bribing the wife of a SriLankan Airlines official, who received $2 million through a Brunei shell company, according to the U.K.‘s Serious Fraud Office.

Following the settlement, Sri Lankan prosecutors said Kapila Chandrasena, the ex-CEO of SriLankan, and his wife, Priyanka Niyomali Wijenayaka, were suspects in a money-laundering case linked to Airbus aircraft sales.

“It was shocking,”Gunatilleka said. “When you hold a public office, you expect people to be credible. That trust was breached.”

Stake Sale

An attempt by the Sri Lankan government to sell a 49% stake in the carrier seems to be off the table, Gunatilleka said. The airline is restructuring, and that should be enough to revive its fortunes, he said.

“The previous government wanted to do it, but I don’t think they had a clear strategy,” Gunatilleka said. “As such, the airline was losing money. Who’d invest, who was going to come and buy even if you want to sell?”

Sri Lanka revived the process of privatizing the state-run carrier that is saddled with at least $1 billion of debt in 2018, a year after talks with sole bidder TPG Capital collapsed following due diligence of the struggling airline. Dubai’s Emirates Airline held 44% of SriLankan until 2010, when the government bought the stake following the end of a 26-year civil war.

Part of the latest restructuring involves tweaking an order for Airbus A350 jets to A330neo planes or narrow-body aircraft, or a mix of both, as the airline seeks to move away from jumbo jets, Gunatilleka said. The airline wants to increase its fleet to 35 by 2023 from 25 currently, he said.