Laxity Forcing PIA to Ground Half of its A310 Planes

By: Amraiz Khan

October 20, 2012

LAHORE – Because of poor planning of former PIA managing director, the loss-stricken national flag carrier will have to ground half of its fleet of A310 aircraft during the next year, adding to the miseries of passengers, well-placed sources revealed to The Nation on Thursday.

Sources said that the PIA was operating 12 A310 aircraft, of which two were currently grounded and their four engines were lying unserviceable for the past ten months. Technical sources claimed that six more engines of three aircraft were due to be overhauled in the next six months. The overhauling of engines would cost about Rs600 million per engine and if PIA wanted to keep its total fleet of A310 operational, it would have to get its ten engines service which would cost Rs6 billion. Sources disclosed that what to say of making engines serviceable, PIA has no cash to purchase spare parts of its other engines which costs far less amount.

Recently, Capt. Junaid Younis rejected such summary on the ground of non-availability of funds. A senior officer of PIA said that twelve Airbus A310 Aircraft constitute major volume of PIA fleet of 39. There are two different models being operated by national flag carrier. Amongst twelve aircrafts, six are powered by General Electric CF6-80C2 engines and the other six by Pratt & Whitney PW4000 engines. The airline has in-house overhaul facility for CF6-80C2 engines while PW4000 were sent to an Eagle Services Asia, Singapore under an agreement called Fleet Management Programme (FMP). PIA was operating PW4000 powered A310 aircraft under lease agreement with Airbus Leasing since 2003.

PIA management, headed by the then PIA MD Capt Nadeem Yousafzai, decided to acquire these six aircraft earlier in 2011 instead of lease maturity year 2015. The surprising reconciliation revealed that PIA management failed to claim around $35 million owed by Airbus Leasing and approved the clause in the reconciliation agreement to adjust this amount in some future deals of Airbus aircraft. It is worth mentioning here that this claimable amount was paid by PIA as maintenance reserves over the period of eight years from 2003 to 2011 with a purpose to be used for maintenance of these aircraft. Now millions of dollars being agreed to be paid for the potential purchase of aircraft is pending with Airbus Leasing. On the other side, after acquiring these aircraft the Fleet Management Programme (FMP) agreement has also come to a hasty end without keeping in mind the drastic repercussions for future operations of aircraft. Currently, one of these aircraft bearing registration AP-BGN is grounded almost for the last ten months due to non-availability of engines. PIA is now facing the music of acquiring aircraft in haste and facing acute shortage of funds to get these units back as serviceable. The temporary improvement was evident during a short stay of Rao Qamar Suleman who somehow managed to take bold decisions and reappropriation of payment schedule to different vendors involved in maintenance of PIA engines. Sensible utilisation of funds also improved the provisioning of engineering spares a bit. Unfortunately this improvement proved very short and there is a breakdown again in the supply of engineering spares, sources close to development said. PIA is running its operation without having regular Chairman, Managing Director, Chief Financial Officer, Director HR and Chief Internal Auditor, a senior officer of airlines said. When contacted PIA MD Capt Junaid Younis, his spokesman Kamran said that acquiring planes before lease maturity time was option in lease agreement. He said that two grounded A310 were on routine checking and not grounded for last ten months.

Source: The Nation

PIA decides not to claim $15m from Airbus

Moayyed Jafri

Sunday, October 21, 2012

LAHORE: The decision of Pakistan International Airlines (PIA) not to claim its $15 million, paid to the Airbus - an aircraft manufacturing company, is really perplexing as its depleting fleet has reached a critical point because of dearth of funds, said sources in the national flag carrier on Saturday.

The PIA fleet is currently short of 12 engines in addition to the spare, required to run the national flag carrier on its full strength. In reply to a request for provision of the engines and parts, the GM Purchase Technical & Logistics refused any help, saying that all such procurement had been cancelled due to lack of funds, said the sources.

Airbus A310 Aircraft constitutes major volume of the PIA fleet of 39 aircraft. Among 12 aircraft, there are two different models being operated by the national flag carrier; six are powered by General Electric CF6-80C2 engines and the other six, formerly leased, by Pratt & Whitney PW4000 engines.

The $15 million was paid by the PIA as maintenance reserves over a period of eight years from 2003 to 2011 for the maintenance of six leased aircraft. However, because of a controversial decision, taken by the former managing director Nadeem Yousafzai, the lease was terminated in 2011, instead of lease maturity year 2015.

Experts said the PIA is on the receiving end as the aircraft would have been less than almost a quarter of their worth by the end of the scheduled lease as compared to the amount paid for them in 2011.

The airline has in-house overhaul facility for CF6-80C2 engines, while PW4000 were sent to the Eagle Services Asia, Singapore, under an agreement called Fleet Management Programme (FMP), said the sources.

The reconciliation deal revealed that the PIA management has agreed not to claim $15 million from the Airbus and adjust it in some future deal with the company.

Currently, one of the formerly leased A310 aircraft bearing registration AP-BGN is grounded almost for the last 10 months due to unavailability of engines. Four unserviceable engines are awaiting a decision about their fate for almost 10 months, as each one needs at least $6 million to become functional. Six more removals are expected in the middle of the next year, which will only lead to grounding of almost all A310 PW4000 powered fleet or will need an injection of $6 million each, said the sources.

A short-term improvement was seen during Rao Qamar Suleman period, who somehow managed to take bold decisions and re-appropriation of payment schedule to different vendors responsible for the maintenance of the PIA engines, they said.

The CF6-80C2 engines, which are being overhaul by the PIA Engineering on its own since 2007 is also facing an acute shortage of spares. It aftermath is very clear: the remaining fleet of A310 GE CF6-80C2 engine powered fleet will be on ground, joining an already grounded aircraft having registration No AP-BEQ.

Currently, the PIA is running without a chairman, a managing director, a chief financial officer, a director HR and a chief internal auditor, said the sources.

PIA General Manager Public Relations Sultan Hassan, when contacted, admitted that if a lessee acquires an aircraft, the amount available under maintenance reserves is returned to the lessee.

In this case, he said, the PIA is contractually obliged to continue the payment of rent and reserves till 2016, after which the aircraft would have been transferred to PIA along with the then available balance of maintenance reserves. The PIA management, after obtaining the approval of its board of directors, negotiated with the Airbus Leasing for early acquisition of the aircraft, he added.

Hassan said that as part of the deal, which was approved by its board, the PIA managed to purchase six aircraft and, after price adjustment of the aircraft, as well as other dues payable to Airbus, $15.1 million remained available with the Airbus. He said since Airbus had agreed on premature termination of the lease, they issued a credit note to PIA against which the national flag carrier could purchase / lease Airbus family products in the future. Until such time, that amount would continue to accrue interest for PIA, he added.

Source: The News

If I read this right, B777-340ER have no spare engine.

I think PIA should try to sell these A310s to a cargo carrier like Fedex, and in return try to get some A320s for medium and short haul routes, and some A330-200s for long haul European routes.