PIA escapes financial losses in Airbus A320 crash

PIA escapes financial losses in Airbus A320 crash

KARACHI: Pakistan International Airlines (PIA) has escaped from any financial loss as a result of Airbus A-320 that was crashed on May 22, 2020 a claimed 97 lives, according to annual result for the period ended December 31, 2020.

According to the report, the Airbus A-320 was crashed in an accident on May 22, 2020. The said aircraft was included in the fixed assets of the company as right of use asset (RoUA) in accordance with IFRS 16 ‘Leases’.

“The management determined that there is no significant financial exposure to the company as a result of the above incident as the above aircraft was on dry lease from GE Capital Aviation Services (GECAS),” according to the report.

“As per the agreement, insurance for the aircraft was claimed out by the company, however, the settlement of the insurance amount will be directly between the insurance company and GECAS with no significant financial exposure to the company,” it added.

Accordingly, the company has derecognized the RoUA and its corresponding lease liability amounting to Rs155.77 million and Rs329.62 million respectively and the remaining balance (a gain of Rs173.85 million) is credited to statement of profit or loss on termination of lease, the report said.

“Furthermore, the company [PIA] has obtained passenger and third party liability insurance under which all the affected families and third parties on ground were eligible a compensation from the insurance company and the company is not liable for an further claims,” it added.

The background of the unfortunate accident revealed that Pakistan International Airlines (PIA) flight PK 8303 was a scheduled domestic flight from Alama Iqbal International Airport Lahore to Jinnah International Airport Karachi.

On May 22, 2020, the Airbus A320 in use crashed in Model Colony, a densely populated residential area of Karachi a few kilometers from the runway, while on a second approach after a failed landing.

Of the 91 passengers and eight crew on board the aircraft (99 total on board, 91 lost their lives and two passengers survived with injuries.

Eight people on the ground were also injured in the accident, one of them later succumb to her injuries. The PIA management expressed deep sorrow and grief over tragic incident and stand firmly with the families of the deceased passengers.

Immediately, Emergency Response Center (ERC) and Station Emergency Coordination Room (SECR) were activated and Emergency Response Planning (ERP) Volunteer as well as PIA scouts were deployed to provide all possible assistance to the grieving families.

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