The Pakistan aviation ministry says the country needs PKR 23 billion for restructuring but the government is unsure from where they can get that sum amid an economic crisis.
Pakistan’s state-run airline, the Pakistan International Airlines (PIA), grounded several aircraft as it struggles to keep itself afloat. It only has limited funds to run operations for the next few months and the core functions as well as the non-core assets will be put up for sale by PIA authorities.
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The Pakistan aviation ministry warned the interim government that the PIA is undergoing a severe cash flow crisis. It owes large sums of money to creditors, aircraft lessors, fuel suppliers, insurers, international and domestic airport operators, and even the International Air Transport Association (IATA), Pakistani newspaper the Dawn reported.
PIA grounded five of its 13 leased aircraft and four more planes are expected to join the grounded fleet.
The aviation ministry also told the government that Boeing and Airbus are on the verge of discontinuing the supply of spare parts by mid-September. The aviation ministry urged to secure funding worth PKR 23 billion while suspending duties, taxes and service charges to domestic agencies, the newspaper further added.
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The report pointed out that the aviation ministry did not present a viable plan to back its proposal.
The ministry said the entire restructuring process could take more months but during the process it is vital to keep the airlines operational.
The state of PIA has also led many to question why the state-run carrier is sucking away a large amount of public funds while catering to only less than 3% citizens while power companies face harsh criticism from the citizens despite supplying 80% of the population with electricity while making significant losses.
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The Pakistan government holds 92% share in the PIA. PIA has accrued debts worth PKR 745 billion, which according to the Dawn is five times more than the total value of its assets, the Pakistan aviation ministry said.
“If the situation continues as such, PIA’s debt and liabilities will rise to Rs1,977bn and its annual losses will rise to Rs259bn per annum by 2030,” the aviation ministry warned.
Pakistan’s aircrafts have also been impounded in airports for non-payment of dues and even Saudi Arabian airport authority told PIA to pay the outstanding amount of 8.2 million riyals accrued due to non-payment of liabilities.
