PIA getting rid of four aircraft due to expensive lease

Dec 13, 2020 | News

KARACHI: While the Pakistan International Airlines is set to acquire more planes as part of its business plan, it has decided to remove four ATR aircraft from its current fleet of 30 due to an “expensive lease” arrangement.

One of the four ATR aircraft was sent to Johannesburg from Karachi on Saturday, while the remaining three would soon be sent to the firms from which the national flag carrier had acquired them on dry lease.

The PIA’s fleet comprises 12 Boeing 777s, 11 Airbus A-320s and seven ATRs.

After the cancellation of the lease arrangement of four ATRs, the airline would keep operating the remaining ATR aircraft on short routes to make them financially viable.

A PIA spokesman said in a statement that the first ATR-72 aircraft, having registration number APBKY, departed from Karachi for Johannesburg, South Africa, while three more ATR-72s would be returned.

Three remaining ATR planes to be operated on short routes

He said the ATR-72 aircraft were high on operational cost and expected market value, making flight operations non-profitable.

These aircraft were acquired on lease in 2015 and are costlier than the present market price but PIA was facing problems in returning them due to enforcement of a long-term agreement.

He said the management, on the instructions of PIA chief executive officer retired Air Marshal Arshad Malik, reviewed the lease agreement thoroughly and got benefit of a clause in the document during the suspension of flights due to the Covid-19 pandemic.

“The ATR-72 planes on lease to PIA were costing rentals whilst on ground. PIA officials negotiated a deal to return the aircraft to the leasing company with no cash penalty. It is beyond the norms of leasing business,” the spokesman said.

He said the personal efforts of the airlines’ chief as well as support from its board of directors made such a deal possible under extreme pressure on the aviation sector due to the pandemic.

“It will save the national carrier millions of dollars in rent, which would have been paid had the aircraft continued to be in the PIA fleet but would be sitting idle due to the pandemic,” the spokesman said, adding: “The bleeding has stopped and an expensive deal of the past has been terminated. This is yet another course correction by the PIA CEO.”

Air Marshal Malik congratulated the PIA team on successful negotiations that led to the return of the aircraft. He said it was a difficult but unavoidable decision at this crucial time.

He said under the supervision of the federal government, PIA would soon add new aircraft to its fleet, which would improve the airline’s products and services considerably. “New aircraft and improved service expected since long by our passengers will soon be realised,” he said.

Recently, PIA decided to add eight new narrow-body aircraft to its fleet on dry lease. The aircraft with seating capacity of 170-plus are expected to be delivered next year.

The PIA management has sought bids from different parties by January 11 for acquiring the eight aircraft on dry lease, which means the airline would acquire the aircraft without flight crew.

Published in Dawn, December 13th, 2020

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