SriLankan Airlines sues Airbus for $1bn

SriLankan Airlines (UL, Colombo Int’l) has filed a lawsuit against Airbus for alleged corruption during the procurement of A350-900s and is seeking USD1 billion in damages and compensation, the cancellation of the outstanding order for four aircraft, and the return of USD19 million in pre-delivery payments for these aircraft, DailyFT has reported. The lawsuit follows the Deferred Prosecution Agreement between the UK Serious Fraud Office (SFO) and the manufacturer announced in January 2020. Chairman Ashok Pathirage confirmed the airline had filed the lawsuit, although he did not elaborate in which jurisdiction it was done. SriLankan did not respond to ch-aviation’s request for further details. The alleged corruption in Sri Lanka was one of five counts raised by the SFO during its investigation. According to the allegations summarised in the judgement approving the DPA, Airbus failed to prevent graft and bribery during the sale of its aircraft to SriLankan Airlines. In particular, it allegedly offered USD16.84 million in bribes to an intermediary Brunei-based straw company to secure contracts for the sale of six A330-300s and four A350-900s, and the lease of a further four A350-900s from ILFC (three) and AerCap (one). Of the proposed bribe, only USD2 million was paid. The other four counts raised by the SFO concerned alleged bribery practices in Malaysia (AirAsia Group deals), Taiwan (TransAsia Airways), Indonesia (Garuda Indonesia Group), and Ghana (a governmental procurement). Under the DPA, Airbus agreed to pay EUR984 million euro (USD1.17 billion) in the United Kingdom. Including similar agreements in France and the United States, the European manufacturer’s overall bill reached EUR3.6 billion (USD4.3 billion). While SriLankan Airlines took delivery of the A330s, it has been trying to extricate itself from the A350 deal since 2015, just two years after the Sri Lankan national carrier placed the order. It cancelled the four lease commitments between 2015 and 2017, agreeing to pay a USD98 million penalty and leasing in an A330-200 in an unsuitable configuration instead. The settlement reportedly also included increases in other lease rates. Despite the carrier’s attempts to convert the other four A350s to A330neo, the order remains formally binding. The Sri Lankan office of the global anti-corruption watchdog Transparency International welcomed the carrier’s decision to sue Airbus and seek damages. Airbus did not respond to ch-aviation’s request for comment.