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PIA Seeks Loans to Prevent Flight Disruptions


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Pakistan International Airlines (PIA) has found itself in dire financial straits, leading the national flag carrier to urgently request an additional loan of over Rs7 billion from banks to sustain its ongoing operations. The airline’s precarious financial situation has raised concerns about potential flight disruptions or even a complete suspension of operations.

In response to these pressing concerns, PIA’s administration has reached out to the Aviation Division, urging them to expedite the arrangement of an immediate loan of more than Rs7 billion from banks.

In an official letter addressed to the Aviation Division, PIA has underscored that the government of Pakistan’s guarantee allows the airline to secure a loan of up to Rs7.5 billion. However, it is noteworthy that no bank has expressed interest in providing a loan of Rs5 billion to the airline given the severe financial issues PIA is currently facing.

The letter further outlines the repercussions of the airline’s financial challenges, including the suspension of fuel supply in Jeddah and Dubai, with even the Pakistan State Oil (PSO), the state-owned oil marketing company, refusing to supply fuel to PIA. The letter also highlights the looming threat of the International Air Transport Association (IATA) suspending PIA’s membership, as well as notices issued by the Federal Board of Revenue (FBR) to the airline.

The urgency of the situation is emphasized in the letter, calling on the Ministry of Finance to intervene promptly and instruct banks to provide a loan of Rs7.5 billion under the government’s guarantee. The letter was sent by the General Manager of Funds Management to the Deputy Director of the Division for necessary action.

Last month, on September 22, the caretaker privatization minister announced that the government was committed to keeping PIA, despite its status as the highest loss-making enterprise. The government pledged not to terminate the employment of any entity’s employees even after its privatization. These statements were intended to allay concerns from groups working to safeguard the airline, despite its severe financial crisis.

The PIA had previously requested a moratorium on its domestic debt repayments to bridge an annual deficit of Rs153 billion between its sales and essential expenditures. Discussions between PIA management and the Ministry of Finance were ongoing regarding the restructuring of domestic debts amounting to approximately Rs260 billion, owed to nine commercial banks. The decision on this matter was still pending.

The challenges faced by PIA are multi-faceted, involving debt restructuring, tax payments, and the settlement of fees and charges owed to the Civil Aviation Authority (CAA). The government, holding a 92% stake in the airline, has committed to providing support and, if necessary, restructuring the airline’s debt.

The situation is a testament to the complex and intricate nature of the challenges faced by PIA and the importance of securing the airline’s financial stability to ensure the continuation of its operations.

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