PIA pays $7mn in lease dispute but $2mn still in balance

PIA - Pakistan International Airlines (PK, Islamabad International) has paid USD7 million to Irish lessor Peregrine Aviation as part of a dispute involving two B777-200ERs, one of which was impounded in Malaysia earlier this month. But talks continue over a further USD2 million, lawyers representing the airline told a judge at the High Court of Justice in London.

The hearing at the court was adjourned on January 22, as the two parties agreed to settle the issue out of court, the newspaper Dawn reported.

PIA’s lawyers objected to the seizure of the aircraft at Kuala Lumpur International airport, but the court said it could not order its release as it was the result of a ruling in another jurisdiction.

According to ch-aviation analysis of Flightradar24 ADS-B data, B777-200(ER) AP-BMH (msn 32717) remains in the Malaysian capital where it landed on January 15. The ch-aviation fleets module shows that the Pakistani carrier’s fleet includes six B777-200(ER)s, two of which are leased. The other leased -200(ER), AP-BMG (msn 32716), has been at Karachi International airport since December 20.

As previously reported, the two jets were initially leased to PIA in 2015 by AerCap but were later part of a portfolio of 21 aircraft worth USD800 million that AerCap sold to Peregrine in 2018.

Peregrine Aviation Charlie Limited filed the case against PIA over alleged unpaid lease payments amounting to USD9 million. According to the contract, the monthly charges were set at USD580,000 plus maintenance reserves of USD315,000 per month.

PIA argued that the maintenance reserves should be calculated according to a flying cycle logged only when the engine is on. As the two aircraft in question were not in use for six months during the Covid-19 pandemic, between April and September 2020 inclusive, these costs should not be invoiced, it said.

However, the lessor insisted that the contract did not cover Covid-19 as force majeure and that PIA must pay regardless of how much the aircraft are flown. These are the costs that represent the USD2 million that are still under dispute.

PIA was not immediately available for comment.