ISLAMABAD – The national carrier of Pakistan has reportedly resolved a $26 million dispute with Asia Aviation Capital Limited (AACL) through an out-of-court settlement.
The out-of-court settlement was done based on the weak legal footing of Pakistan International Airlines (PIA) and the decision was reached following legal counsel’s advice.
The settlement was confirmed by the Ministry of Aviation which told the Economic Coordination Committee (ECC) that the PIACL leased two A320 aircraft from AACL in 2015 for a year period.
The aircraft were registered as AP-BLY (MSN 2926) and AP-BLZ (MSN 2944) and reportedly the two planes were leased at a monthly rent of nearly $550,000 including rent, maintenance costs and insurance for the aircraft.
The planes remained part of PIA’s fleet and when the time came to return the aircraft, AACL could not send their team to Pakistan due to COVID-19 and engaged FL Technic, a global aircraft maintenance provider based in Lithuania, to conduct the inspection in Jakarta.
It was then decided that the aircraft would be redelivered in six to eight months after repairs; however, this schedule could not be followed.
This delay triggered an exchange of claims and counterclaims between AACL and PIA as to the responsibility for the delay. The issue was prolonged further and PIA kept bearing losses for two planes, the firm was not even operating.
The issue was highlighted once again in 2022 when senior officials contacted their counterparts in Kuala Lumpur but to no avail.
On September 11, PIA received a Court Notice through AACL’s UK-based counsel Herbert Smith Freehills for immediate payment of $31.3 million against outstanding rent, redelivery rent, maintenance costs and interest charges for the two aircraft, The Profit reported.
PIA’s UK-based counsel Norton Rose & Fullbright sought time from the High Court of Justice, England and Wales, London to reply to AACL’s claims, fixing October 30th as the next date of hearing.
Though the matter was in the courts, PIA’s counsels opined that the carrier’s position in this matter was quite weak, recommending an out-of-court resolution with AACL.
Consequently, it was decided that the matter be solved out of court and two board members and the Secretary Aviation should negotiate with AACL for such a settlement.
The matter was then settled for an amount of $26 million after which the Ministry of Finance would also be engaged for financial assistance in this regard.
