PIA cancels four ATR-72 aircraft leasing deal

KARACHI: Cash-strapped Pakistan International Airlines (PIA) on Saturday said it removed four French-built ATR-72 aircraft from its fleet due to an expensive lease arrangement, high operational cost and low profitability.

The first ATR-72 – registration number APBKY – has departed from Karachi for Johannesburg, South Africa, while the other three would also be returned, PIA spokesman said.

“PIA ATR-72 aircraft were high on operational cost and expected market value, resultantly making the flight operations non profitable,” he added. These aircraft were acquired on a dry lease back in 2015. ATR-72 aircrafts, each with a capacity of 66 seats, were more expensive compared to the present market price, but the carrier was unable to return them earlier due to the enforced long-term agreement.

Along with the lease, PIA was incurring huge amounts on the planes whilst on ground. Therefore, on the instructions of PIA CEO Air Marshal Arshad Malik, PIA officials negotiated a deal with the leasing company to return the aircraft without any cash penalties. “It is beyond the norms of leasing business,” the spokesman claimed. With Covid-19 impacting air travel across the globe, the already struggling national flag carrier had no option, but to return the said planes.

The spokesman said that this deal was only made possible because of the PIA CEO’s personal efforts and the board’s support, which saw the extreme pressure that the pandemic had put on the aviation sector.

“It will save the national carrier, millions of dollars in rent”, which the airlines would have had to pay because of the planes getting grounded on account of the current pandemic situation.

PIA CEO Air Marshal Arshad Malik, while congratulating the PIA team on successful negotiations, said that it was not only a difficult decision at this crucial time, but an unavoidable one as well. “The airline will keep operating other ATR aircraft, which make the operations viable on short routes. Meanwhile, under the supervision of the government of Pakistan, PIA will soon acquire new aircraft in its fleet, which will improve the airline’s product and service considerably.”

New aircraft and improved services have long been expected of the national carrier, and these expectations would soon be fulfilled, the CEO said. Officials saw the termination of this deal as “course correction”; a step taken in the right direction under the leadership of PIA CEO, the statement added.

For the nine-month period ended September 30, 2020, Pakistan International Airlines Corporation Limited posted a loss of Rs44.509 billion in its consolidated condensed interim statement.