Government trying to find Rs 8 billion loan guarantee for PIA

In this file photo a PIA plane is parked at the airport.  - AFP
In this file photo a PIA plane is parked at the airport. – AFP
  • PIA has 34 aircraft in its fleet, of which two are inactive.
  • PIA’s revenue has dropped to Rs 300 million.
  • Airline spokes say 15 international flights, 7 domestic flights will depart today.

ISLAMABAD: As Pakistan International Airlines (PIA)’s revenue declined by 70% after over 600 flights were cancelled, the Finance Minister sought a loan guarantee of Rs 8 billion from the International Monetary Fund (IMF) to remain within the agreed limit. Struggling to get by. news The news is quoted from sources.

According to sources, the national carrier experienced a huge decline in its daily revenue – around 60% to 70%. The airline generated around Rs 700 million and Rs 800 million, which has now come down to Rs 300 million.

PIA has 34 aircraft in its fleet, out of which two aircraft are inactive due to different reasons. Meanwhile, the airline does not even have funds to meet its fuel requirements. Following the flight cancellations, the national air carrier is now announcing only those flights for which fuel has been purchased, as this will ensure operations without any delays.

Last week, the ECC approved bridge financing of Rs 8 billion through CAA resources, which will be used to pay off the $25 million of liabilities owed to Malaysia for the purchase of the two aircraft. The outstanding amount was $30 million but after tough negotiations, PIA convinced them to pay $25 million.

PIA had demanded Rs 24.6 billion from the Government of Pakistan for its operating expenses. The Finance Ministry had initially rejected the demand for this injection on the grounds that in the past, PIA had come up with financial injection with a commitment to initiate the restructuring plan but it was never implemented.

The Privatization Commission is making every possible effort to complete all the necessary processes to push the privatization forward by December or January. It remains to be seen how fast they will be able to complete all the work and processes without compromising the objective of transparency.

Completing the PIA transaction but also maintaining its operations will be a difficult task. If it reaches the point of closure in its current form, its privatization will not yield the desired results.

The Finance Ministry is working on creating a fiscal space and will provide its approval in the form of a guarantee to generate loans worth Rs 8 billion.

“We may be able to increase all the financial investments to Rs 15 billion, but it is too early to share the exact numbers,” an official said. He said the outcome of the ongoing exercise would be determined this week. The total guarantee limit for PIA was Rs 262 billion, which had expired but the airline later paid off its outstanding loans. So at this time there was a scope of Rs 8 billion available.

There seems to be no easy solution for the cash-strapped PIA, but its privatization should be done in such a way that it remains operational for the next three to six months.

PIA will operate 22 flights today

Meanwhile, PIA spokesperson said the airline will operate 22 domestic and international flights today. However, 29 flights have also been canceled today due to the overall situation.

talking with geo newsThe spokesperson said that 15 international flights and seven domestic flights will depart today.

“PIA’s flight operations are improving,” the spokesperson said.

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