Colombo, February 10

Sri Lanka will review a controversial deal reached by the previous administration to buy new Airbus aircraft despite huge losses at the national carrier, the prime minister said today.

Ranil Wickremesinghe said SriLankan Airlines could not economically operate long-range A350-900 aircraft ordered by the previous government, but needed short-haul planes for profitable Asian routes.

Responding to a question from the opposition, Wickremesinghe told parliament the airline was losing money on every flight to Europe and adding new planes would only worsen accumulated losses standing at over $650 million.

“They (the previous government) had agreed to buy four A350-900 planes and lease another four,” he said. “We have not paid a deposit, but if we default we have to pay a penalty of $12 million.”

He said police Financial Crimes Investigation Department was probing the entire deal agreed by administration of then president Mahinda Rajapakse, which was toppled in January 2015 elections.

The initial transaction, including six A330 planes, was estimated at $2.3 billion. An airline official said all A330 planes had been delivered while the A350 aircraft were due to be delivered from this year.