Dec 06, 2016

Sri Lankan Airlines -PIA wet lease goes dry

Pakistan International Airlines (PIA) continues negotiations on the leasing of two more Airbus A330 aircraft from Sri Lankan Airlines while insisting the local airline authorities to revise the previous wet lease agreement with a discount on the previous aircraft acquired by them, Pakistan government aviation sources reported.

The PIA has delayed the installment payment for the wet lease of Airbus A330 aircraft from Sri Lankan Airlines as the Air line has already made a request for discount for the air bus deal.

The Sri Lanka Airlines top management has written to the PIA expressing its concern on the delay of the lease payment while stressing the need of the airline to stick to the terms and conditions of the lease agreement, Pakistan aviation sources said.

The newly-hatched PIA deal with Sri Lanka Airlines has failed to break even at the least due to non payment lease installment by the Pakistani side.

The PIA has also planned to convert recently acquired aircraft into dry lease after the airline gives an ample training to its crew on new technology, an official said.

A Special Committee on Performance of PIA was briefed on the launch of premier service by PIA, its impacts so far and terms and conditions of the wet lease with Sri Lanka and reasons of not starting this service between Karachi-London, said a notice of Pakistani Senate Secretariat recently.

Pakistan news agency reports quoted airline’s spokesman Samir Nizami as stating “With the passage of time, our own personnel will be trained on new aircraft and subsequently all such planes will be converted into dry lease,” “More aircraft will be acquired on dry lease.”

In August, state-owned PIA has taken over three Airbus A330 aircraft from Sri Lankan Airlines on a wet lease. The airline has deployed those aircraft on recently-introduced ‘Premier Service’ on Islamabad-London route.

Sri Lankan, which has incurred losses of US $993 million, is looking for an equity partner to revive the business.

However informed sources said that the PIA is also a loss making Air line and it is planning to privatise the entity.

Despite lower fuel cost, accumulated losses of PIA increased to Rs267.56 billion at the end of the January-March quarter of 2016, up 2.3%.

The PIA sources said the prolonged strike in February, which was led by employees in protest against the government’s intention to privatize the state-owned company, was the key reason behind the losses.