- Pakistan International Airlines (PIA) has temporarily grounded multiple aircraft.
- PIA’s financial woes have led to arrears with creditors, lessors, suppliers.
- The Economic Coordination Committee (ECC) has established a committee to assess PIA’s.
In Islamabad, Pakistan, the national carrier, Pakistan International Airlines (PIA), has confirmed the temporary grounding of several aircraft due to financial difficulties.
The airline has expressed its intention to return these aircraft to operation once outstanding payments are settled, although the exact number of grounded planes remains undisclosed. PIA’s financial struggles have persisted over an extended period, prompting the airline to seek government assistance to remain operational.
The Ministry of Aviation has informed the government about PIA’s severe cash flow crisis, which has resulted in unpaid dues to creditors, aircraft lessors, fuel suppliers, insurers, and both international and domestic airport operators. Additionally, payments to the International Air Transport Association (IATA) are pending.
The ministry revealed that five of PIA’s 13 leased aircraft have already been grounded, and there is a possibility that four more may face a similar fate.
PIA’s spokesperson, Abdullah Khan, confirmed that the airline had to cancel numerous domestic and international flights due to the grounding of at least five Airbus A320 jets.
According to Bloomberg, PIA’s liabilities have ballooned to Rs743 billion (approximately $2.5 billion), exceeding its total assets by five times. The situation worsened when reports emerged that spare parts supplies to the airline might be suspended due to cash flow problems.
The Economic Coordination Committee (ECC) addressed PIA’s ongoing financial losses and decided to form a dedicated committee to assess the airline’s restructuring plan. However, the ECC rejected PIA’s request for Rs22.9 billion in immediate funding and the deferral of Rs1.3 billion per month to the Federal Bureau of Revenue (FBR), along with loans and interest payments, until the restructuring plan’s finalization.
During the meeting, the Secretary of Aviation provided a comprehensive overview of PIA’s financial burdens and liabilities, emphasizing the urgency of restructuring the state-owned enterprise. The committee members discussed the timelines and costs associated with the restructuring plan before agreeing to establish a separate committee for its assessment.
Furthermore, it was decided that the Finance Division and the State Bank of Pakistan would extend support to PIA in addressing its financial challenges once a concrete restructuring plan was formulated and presented to the committee’s satisfaction.
Calls for the privatization of PIA have emerged due to its ongoing economic challenges. Former Aviation Minister Khawaja Saad Rafique emphasized the need for privatization to prevent the airline from ceasing operations. During the final days of the PDM regime, a decision was made to include PIA in the list of active privatization projects, pending an amendment in the law by the Parliament, as per a statement from the finance ministry.