SriLankan Airlines (UL, Colombo International) is planning to take advantage of depressed lease rates to renew its ageing widebody fleet and has again warmed up to the idea of adding A350 aircraft, Chief Executive Vipula Gunatilleka said during the online Routes Reconnected conference.
"Six or seven aircraft will go out of service in the next two years or so. So we are looking for a replacement. The advantage is that now I can get aircraft at much cheaper prices. We want to keep an all-Airbus fleet, so we will be looking at A330-900s or even A350s. The A350s are now affordable, and with the cargo demand, this might be a handy aircraft for the long-haul," he said.
The carrier still has a firm order for four A350-900s from Airbus as a leftover from its ill-fated 2013 order for a total of eight aircraft, including four from the manufacturer, three from ILFC, and one from AerCap (the two lessors later merged). The type was quickly deemed unsuitable for the airline. SriLankan Airlines has been trying to extricate itself from the deal since 2015. 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. It has also been trying to convert the four remaining orders from Airbus to A330neo aircraft.
In March 2021, SriLankan Airlines filed a lawsuit against Airbus for alleged corruption during the procurement of the A350-900s, 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. According to the Deferred Prosecution Agreement between the UK Serious Fraud Office (SFO) and Airbus, the manufacturer failed to prevent graft and bribery during the sale of its aircraft to SriLankan Airlines.
The airline's current widebody fleet comprises five A330-200s (18.7 years old on average) and seven A330-300s (6 years). All twelve aircraft are dry-leased, the ch-aviation fleets module shows.
Gunatilleka also reaffirmed that the airline is in the process of looking for its first two dedicated freighters.
He said that during the COVID-19 pandemic, the carrier had reoriented its network to focus on cargo services, including flights to destinations not served previously on a scheduled basis. This also entailed a radical downsizing of its Indian network, previously its most important market for connecting passengers. SriLankan Airlines plans to continue its reliance on cargo as its main revenue driver and rebuild its passenger network around routes with significant freight demand.
"[In the near term,] we will focus on the long-haul mainly, and we will have to reduce our reliance on the Indian market," Gunatilleka said.
He underlined that Sri Lanka hoped to reopen more widely for tourism during the current summer season. While many markets are likely to remain closed, Gunatilleka said he was hopeful that Russian tourists would come in the next few months. While traditionally arrivals from Russia had been concentrated during the winter season, the current restrictions have changed those patterns. Going forward, the recovery will rely heavily on the integration of border protocols, including through digital tools.
"India will recover fast, we would expect the same from China, and the Middle East as well, where there is a lot of Sri Lankan expatriate workers... If India reopens, we will also have more connecting traffic from Australia," he said.
SriLankan is also optimistic about the demand from and to Europe, including the United Kingdom, Sri Lanka's primary destination market. Gunatilleka said the carrier was also considering the relaunch of services to Frankfurt International and Paris CDG.
