SriLankan - PIA negotiate aircraft lease

SriLankan Airlines entered into a ‘wet lease’ agreement with Pakistan International Airlines (PIA), owned by the government of Pakistan, recently, whereby an Airbus A330-300 aircraft is leased by SriLankan to PIA on the Aircraft Crew Maintenance and Insurance (ACMI) basis.

This means, the aircraft will remain under SriLankan registry and be flown by SriLankan’s pilots on behalf of PIA, on the ‘Premier Service’ routes between Pakistan and the UK, for a period of three months.

Pakistan lost an aircraft due to a crash just 50 km (31 miles) short of its destination, the international airport in Islamabad, the capital, recently.

“The immediate impact on losing an aircraft is huge. This is one of the reasons why the PIA entered into a wet lease agreement with the SriLankan Airlines. It was reported in the media that the PIA has delayed the instalment payment for the wet lease of Airbus A330 aircraft from Sri Lankan Airlines, as the Airline has already made a request for a discount for the air bus deal. However, they have made good those payments and currently, payment is being made according to the agreement”, Deputy Minister of Public Enterprise Development, Eran Wickramaratne said.

“The issue has been resolved and payment of instalments are on track,” he said.

At present, SriLankan Airline is engaged in negotiations with PIA with regard to leasing a total of three aircraft on ‘dry-lease’, without crew, in the coming months. This is part of the company’s ‘red to black’ campaign to bring the airline back to profitability by exploring all commercially viable avenues.

“There is a proposal to give two more aircraft to the PIA and we are negotiating the deal at present,” the Deputy Minister said.

In August, state-owned PIA has taken over three Airbus A330 aircraft from Sri Lankan Airlines on a wet lease. The airline has deployed them on the recently-introduced ‘Premier Service’ on the Islamabad-London route. SriLankan, which has incurred losses of US $993 million, is looking for an equity partner to revive the business.

“The SriLankan Airline will undergo a restructuring process to overcome the losses. There will be a process of restructuring and route restructuring to meet the requirement of turning it into a viable venture. We will examine the ability of capital infusion and in this regard, look for partners with international experience to revive the airline,” Deputy Minister Wickramaratene said.

There are 8 potential partners at present, and we have received three proposals for detailed study purposes. We are in the process of discussing with one serious partner at present, for the Airline to be restructured and turn it into a commercially viable venture. It is a reputed company and a private equity fund. We are having discussions at length. In addition to capital infusion, we are also discussing with leading airlines to work directly with them on a code sharing basis, he said.

Commenting on the progress of the resurfacing at the Bandaranaike International Airport (BIA) runway, he said, the activities are going on as per the plan.

“The work at the runway at the BIA is progressing according to schedule. We were able to minimize congestion at the airport and keep activities at satisfactory levels. However, we could have avoided this if correct planning had been carried out initially,” he said.

The country did not need a second airport and if we planned for a second runway at BIA it would have been much more advisable.

However, due to bad planning we had to carry out the resurfacing activities at the BIA with minimum inconvenience to the travellers, he said. 

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