LONDON: Pakistan International Airlines (PIA) is in negotiations with Peregrine Aviation Charlie Limited, an Irish aircraft dealer, to pay approximately $2 million as part of an outstanding deposit by the Dublin-based firm AerCap for an aircraft lease deal.
A lawyer defending PIA told the judge during a hearing at the High Court here on Friday that the national flag carrier had paid $7 million to Peregrine as part of the lease deal, but for the balance of $2 million, a disagreement remains.
As the two sides decided to resolve the matter out of court, the trial was adjourned.
It was this stumbling point that formed the basis last week for the PIA plane’s seizure in Malaysia.
National flag carrier, Irish aircraft broker are settling outstanding sum out of court
At the London hearing, the lawyers of PIA objected to the interception of their aircraft in Malaysia; the court did not, though, pay attention to the development as it stemmed from a court order in another jurisdiction.
Peregrine Aviation Charlie Limited brought a lawsuit against PIA in the United Kingdom to pay dues amounting to $9 m. With this business, PIA entered into a leasing agreement covering lease, maintenance reserves and insurance premiums for two aircraft, a Boeing 777 with serial number 32,716 and a Boeing 777-200ER with serial number 32,717.
The lease leasing payments were set at $580,000 a month and the maintenance reserves at $315,000 per month, according to the deal.
The role of PIA is to measure maintenance reserves according to the flight period that is logged every time the engine is started and turned off. As this particular aircraft was grounded for six months between April and September of last year during the Covid-19 pandemic, PIA submits that repair costs should not be billed.
However, the aviation company is of the opinion that Covid-19 is not protected by the arrangement as a force majeure which restricts liability and that PIA should compensate regardless of how far the aircraft is flew.
It seems that, despite not having flown the aircraft, PIA would have to pay $2 m in maintenance reserve costs due to the nature of the deal.
According to orders released by Reuters on Thursday by the Kuala Lumpur High Court, the complainant of the case is Peregrine Aviation Charlie Limited and the matter relates to two jets leased by Dublin-based AerCap, the world’s largest aircraft lessor, to PIA in 2015.
They are part of a portfolio that AerCap sold in 2018 to Peregrine Aviation, an acquisition subsidiary of National Commercial Bank SJSC’s trading arm, NCB Capital.