By Staff Reporter
KARACHI: Pakistan International Airlines (PIA), the country’s flag carrier, is facing a severe financial crisis that has forced it to scale down its flight operations and seek a government bailout to clear its mounting debts and unpaid bills.
The airline, which is 92 percent government-owned, has accumulated debts and liabilities of Rs.743 billion as of December 2022, according to a briefing by the Ministry of Aviation to the Economic Coordination Committee (ECC) of the Cabinet on September 6.
Local media reported that PIA’s debt and liabilities were five times more than the total value of its assets, and its total losses for the last financial year stood at Rs.86.5 billion, out of which Rs.11 billion were operational losses.
If the situation continued as such, PIA’s debt and liabilities would rise to Rs.1.977 trillion and its annual losses would rise to Rs.259 billion by 2030.
Earlier this month, the caretaker government rejected PIA’s request for a Rs.22.9 billion bailout package to help ease its cash flow problem, instead directing that emphasis should be placed on PIA’s privatization rather than restructuring, as the national flag carrier is on the active list of privatization.
PIA made its request for a financial bailout at a time when Pakistan is facing an economic crisis and avoided sovereign debt default by securing a $3 billion loan from the International Monetary Fund in July.
PIA has been struggling to pay its creditors, aircraft lessors, fuel suppliers, insurers, international and domestic airport operators, and even the International Air Transport Association (IATA), which represents the global airline industry.
As a result, it has been forced to ground five out of its 13 leased aircraft, while four additional aircraft are likely to be grounded this week. Additionally, Boeing and Airbus are likely to discontinue the supply of spare parts by mid-September.
PIA has also been unable to pay salaries or airport charges and has faced frequent flight cancellations and delays due to technical issues and a lack of crew availability.
The previous administration of Prime Minister Shehbaz Sharif, which stepped down in August after the parliament completed its five-year term, had announced its intention to privatize PIA in 2022, but faced resistance from coalition partners and labor unions.
The caretaker government of Anwar ul Haq Kakar, which took office in August to oversee elections in the country, has instructed relevant authorities to finalize PIA’s restructuring plan within three months.
PIA has a history of poor performance and mismanagement and has frequently received large sums of money from the government in the past to help it meet its operational expenses. However, the airline has continued to rack up billions of rupees in arrears and losses over the years, despite several attempts at reform and restructuring.
Copyright © 2021 Independent Pakistan | All rights reserved
