PIA plane 'impounded' in Malaysia over $14 million lease dispute

Charlotte Greenfield, Joseph Sipalan and Liz Lee
·3 min read

By Charlotte Greenfield, Joseph Sipalan and Liz Lee

ISLAMABAD/KUALA LUMPUR (Reuters) - A Pakistan International Airlines plane has been held back by Malaysian authorities due to a British court case over the jet's lease, the airline said on Friday, adding it would pursue the matter through diplomatic channels.

The Boeing 777 aircraft was seized after a court order, an airline spokesman said, and alternative arrangements were being made for passengers due to fly from Kuala Lumpur back to Pakistan.

The case involved a $14 million lease dispute, a PIA official said.

"A PIA aircraft has been held back by a local court in Malaysia taking a one-sided decision pertaining to a legal dispute between PIA and another party pending in a UK court," a PIA spokesman Abdullah H. Khan said in a statement.

"We were told that the plane has been impounded on a court order," Khan said later in a video statement. "PIA's legal team will pursue it in the Malaysian court, and we hope that we will resolve this issue as soon as possible."

According to orders passed by the Kuala Lumpur High Court on Thursday seen by Reuters, the plaintiff of the case is Peregrine Aviation Charlie Limited and the matter pertains to two jets leased to PIA by Dublin-based AerCap, the world’s largest aircraft lessor, in 2015.

They are part of a portfolio that AerCap sold to Peregrine Aviation Co Ltd, an investment unit of NCB Capital, the brokerage arm of National Commercial Bank SJSC, in 2018.

According to the interim injunction, PIA is restrained from moving two aircraft in its fleet – a Boeing 777- 200ER with serial number 32716 and a Boeing 777- 200ER with serial number 32717 – once they have landed or parked at Kuala Lumpur International Airport until a further hearing on the matter later this month.

Tracking data from Flightradar24 showed only one of the two Boeing 777s covered by the court order is currently in Kuala Lumpur. The other was last recorded in Karachi last month.AerCap, which continued as part of the agreement to provide lease management services to Peregrine, declined to comment.

Malaysia Airports Holdings Berhad, the country's airport operator, and its subsidiary were ordered to make sure the aircraft do not leave Kuala Lumpur International Airport.

Malaysia’s Ministry of Transport said in a statement on Friday that the aircraft was being held pending legal proceedings set for Jan. 24.

Malaysia Airports Holdings Bhd said the matter was not related to airport operations.

PIA in a statement described the situation as "unacceptable" adding that it had asked for support from Pakistan's government to raise the matter diplomatically.

The office of Malaysia's prime minister and the foreign ministry did not immediately respond to requests for comment.

Pakistan's High Commission in Malaysia was "in close contact with the relevant Malaysian authorities and Pakistan International Airlines to address the issue," ministry spokesman Zahid Hafeez said, adding that the passengers would be flown home on Friday.

With more than $4 billion in accumulated losses, PIA was already struggling financially when flights were grounded last year due to the pandemic.

After it resumed operations in May, a domestic PIA flight crash in Karachi killed 97 of 99 people on board.

Pakistan’s aviation industry was then hit by a scandal in which pilots were found to hold “dubious” licences – prompting a number of countries to ban PIA from operating flights in their jurisdictions.

The airline was banned from flying to the European Union for six months over safety compliance concerns under a ban still in place.

(Reporting by Charlotte Greenfield and Asif Shahzad in Islamabad, Syed Raza Hassan in Karachi, Joseph Sipalan and Liz Lee from Kuala Lumpur, and Tim Hepher in Paris; Writing by Gibran Peshimam; Editing by Jason Neely, Susan Fenton and Louise Heavens)