SriLankan Airlines Issues RFP For Lease Of Up To 42 Aircraft; Where Has Rationality In Governance Gone?

By Chandra Jayaratne –APRIL 15, 2022

Chandra Jayaratne

Ch-Aviation, an influential airline intelligence provider, founded in 1998 in Chur in Switzerland, maintains a new portal providing decision-makers around the globe with relevant and up to date airline intelligence and insightful news on the industry. It carries a new item date lined 11th April 2022, titled “SriLankan Airlines issues RFP for lease of up to 42 aircraft”[1] and extract of which is quoted below:

“SriLankan Airlines (UL, Colombo Int’l) has issued a wide-ranging Request for Proposals for the dry lease of up to 42 aircraft covering all segments of jet aircraft.

The RFP is split into four separate calls, of which two concern current – generation Airbus narrow – and widebody aircraft, and the other two new-generation regional and long-haul aircraft.

The current-generation narrowbody request seeks the lease of up to eleven aircraft, which can be A320-200s, A320-200Ns, A321-200s, or A321-200Ns. Deliveries are tentatively scheduled between December 2022 and April 2025, although the carrier said it is willing to renegotiate this timeline with the selected lessor. The airline is also seeking up to ten A330s, either A330-200s or A330-300s. Deliveries are expected to commence in December 2022 and continue through October 2025. SriLankan Airlines intends to lease all of the current-generation aircraft for 4-6 years each and requires that the aircraft be less than 15 years old at the time of delivery. They can be delivered in pre-existing cabin configuration with an option of reconfiguration.

The new-generation RFP for regional jets concerns the dry lease of up to eleven aircraft, which can be A220-100s, A220-300s, E190-E2s, or E195-E2s. Deliveries are tentatively planned between December 2022 and April 2025. The lease duration will be six years or more. SriLankan Airlines said the aircraft have to be less than 15 years old at the time of delivery, although the requirement is moot as all four types have not been in production for that long.

Finally, SriLankan Airlines is seeking ten new-generation widebody aircraft with deliveries starting in December 2022 and continuing through October 2025 for leases lasting at least six years. The carrier identified the A330-800, the A330-900, the A350-900, the B787-9, and the B787-10 as preferred types.”

The above call for Requests for Proposals comes in the backdrop of the serious macro-economic, external debt and foreign currency illiquidity seriously impacting on lives, livelihoods of citizens and the solvency of Sri Lanka, a country then rated as ‘CC’ (A credit rating given to a prospective borrower that’s not of investment grade and implies a very high degree of risk). On 12th April 2022, the Governor of the Central Bank of Sri Lanka (CBSL) Dr. Nandalal Weerasinghe said that Sri Lanka will suspend Normal Debt Servicing and start negotiating debt restructuring with the CBSL deciding to resort to a Pre-emptive Negotiated Default of the Foreign Debt. The Central Bank Governor further pointed out that the scarce foreign currency reserve should NOT be used to service debt, adding that it should instead be used to purchase other essential items; and further that urgent arrangements are necessary to approach the International Monetary Fund, other Multilateral agencies and friendly nations for interim support, pending debt restructure and having in place an IMF Fund Facility support.

Following this announcement rating agencies dropped Sri Lanka’s sovereign rating to ‘C’ stating “Sri Lanka was downgraded deeper into junk by Fitch Ratings, which said the nation’s decision to suspend payments on its foreign debt has kicked off a sovereign default process. Fitch Ratings had earlier downgraded the nation’s long-term foreign currency to CC, one step above default. The decisions come amid widespread social and political unrest, which led the government on Tuesday to announce it will no longer service its external debts to conserve foreign currency for crucial imports, such as food and fuel”.

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