Pakistan’s PIA Nears Resolution in A320 Lease Dispute with $26 Million Payment

In a significant development, Pakistan International Airlines (PIA) is on the verge of settling a prolonged dispute with Asia Aviation Capital Limited (AACL) over two A320-200 aircraft stranded at Jakarta Soekarno-Hatta. AACL, a subsidiary of Capital A, initially sought USD31 million from PIA, but both parties are said to have reached a consensus on a USD26 million settlement.

The resolution is expected to be formalized soon, following a series of meetings in Kuala Lumpur. A PIA spokesperson informed ch-aviation that a resolution is imminent, marking the end of a contentious legal battle. In the background, AACL had taken the matter to the UK High Court in a case titled Asia Aviation Capital Limited v. Pakistan International Airlines Corporation Limited (case no: CL-2023-000543).

The dispute revolves around two aircraft, AP-BLY (msn 2926) and AP-BLZ (msn 2944), leased from AACL in 2015 at a rate of USD265,000 per calendar month per aircraft, along with standard supplementary leasing costs. Legal proceedings began in 2019 when PIA fell behind on payments, resulting in a UK court ruling in favor of AACL. Subsequently, in 2021, AACL ordered the aircraft to Jakarta for maintenance at FL Technics Indonesia, where they have remained since.

AACL’s current claim, totaling USD31,343,641, alleges PIA’s failure to return the aircraft at the lease end date, citing unpaid basic rent, redelivery rent, maintenance reserves, and contractual interest. Previous attempts by PIA to resolve the matter proved unsuccessful. However, recent efforts, including a delegation of PIA and Pakistani government officials heading to Malaysia for talks, signaled a renewed push for resolution.

Notably, PIA’s legal representatives, Norton Rose Fulbright, advised the airline that its chances of winning the UK court case were slim, recommending a mediated solution. The impending agreement is set to see PIA making a payment of approximately USD26 million, with AACL transferring the titles of the two planes to PIA in two installments. To facilitate the settlement, the Pakistan government’s Economic Coordination Committee (ECC) approved bridging finance of PKR 8 billion rupees (USD 28.9 million) on October 29.