By Staff Reporter
ISLAMABAD: Caretaker Prime Minister Anwaarul Haq Kakar instructed his newly appointed Privatization Minister Fawad Hassan Fawad to fast-track the sale of the state-owned Pakistan International Airlines Corp. (PIA), which is facing a severe cash crunch and has grounded some of its planes.
Kakar, who took office last month to oversee national polls, said PIA’s privatization process needed to be expedited urgently to provide a reliable service to users and raise the standard of the national flag carrier to match the global standards, his official said in a statement.
PIA has been struggling to secure funds to maintain its operations for the next few months and has resorted to grounding several aircraft as it owes about $100 million to leasing firms, airport authorities, aircraft spares and others.
The Ministry of Aviation warned last week that Boeing Co. and Airbus SE were on the verge of discontinuing the supply of spare parts by mid-September and requested an immediate cash injection of 23 billion rupees ($139 million) from the government.
The ministry also cautioned that PIA’s restructuring was a complex process that was expected to span around eight months and that for the divestment of PIA’s shares to yield a fair value, the airline must remain operational throughout all stages of restructuring.
As of Dec. 31, 2022, PIA’s debt and liabilities stood at Rs743 billion– five times more than the total value of its assets, the ministry said, adding that its total losses for the last financial year (2022-23) stood at Rs86.5 billion, out of which Rs11 billion were operational losses.
“If the situation continues as such, PIA’s debt and liabilities will rise to Rs1.977 trillion and its annual losses will rise to Rs259 billion per annum by 2030,” it said, warning that Rs383 billion of the current debt liability of PIA were underwritten by the government of Pakistan and being 92 percent owner, the responsibility for the remaining payables also ultimately rested with it.
PIA spokesman Abdullah Khan said some leased planes had been temporarily grounded and would be back once payments were made.
He said there were blocked funds since December 2022, foreign exchange conversion challenges for payments concerning leases, airport handling fees, and component support programs.
“We are not shutting down by the 15th,” Khan said. “The situation might be tough but not to the brink of closure.”
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