Pakistan International Airlines (PIA) has issued a warning that both Boeing and Airbus are likely to suspend the supply of spare parts by mid-September due to the national flag carrier’s “serious cash flow problems.”
In a summary submitted to the Economic Coordination Committee (ECC), PIA requested an emergency bailout. Due to the liquidity crisis, the PIA has been unable to settle debts with creditors, aircraft lessors, fuel suppliers, airport operators, and the International Air Transport Association (IATA).
PIA noted that it had to ground five out of its 13 leased aircraft. In addition, it may ground four more aircraft during the week due to the ongoing financial crisis.
Furthermore, PIA emphasized that maintaining the state-run airline’s operations is crucial in determining a fair share price for its privatization.
However, the ECC meeting rejected PIA’s demand for a provision of Rs22.9 billion and the deferment of Rs1.3 billion per month to the Federal Bureau of Revenue (FBR), as well as loans and interest payments until the restructuring plan is finalized.
During the meeting, the Ministry of Aviation presented a summary on “Financial support for PIACL & its Restructuring,” with the Aviation Secretary providing an extensive briefing on PIA’s financial liabilities and the need for the organization’s restructuring.
The ECC reviewed the restructuring plan’s timelines and costs, ultimately deciding to form a separate committee to assess PIA’s restructuring plan.
Furthermore, the ECC turned down the request for postponing PIA’s monthly payments of Rs1.3 billion to the FBR for Federal excise duty (FED) and Rs0.7 billion per month to the Civil Aviation Authority (CAA) for embarking charges.
The Finance Division and the State Bank of Pakistan have agreed to provide support to PIA in addressing its financial challenges after the airline has finalized and submitted a concrete restructuring plan to the committee’s satisfaction.
