PIA Loses Rs. 2.1 Billion by Leasing Sri Lankan Aircraft

The Sri Lankan aircrafts leased by the Pakistan International Airlines (PIA) have caused a loss of Rs 2.1 billion to the national flag carrier.

According to the documents, PIA acquired one A330 aircraft from Srilankan Airlines for a period of six months, starting from August 10, 2016, at a rate of $8,100 per block hour.

The offers were invited through competitive bidding process as per the Public Procurement Regulatory Authority (PPRA) Rules and Srilankan Airlines’ aircraft was selected for being the lowest evaluated bidder meeting the tender requirements.

Based on provisional/un-audited results, it resulted in a total loss of Rs 2.1 billion.

This matter is under inquiry by Federal Investigation Agency (FIA) and so far the final report has not been submitted nor has it been shared with the PIA.

The documents further revealed that after 2013, a decreasing trend in overall losses was witnessed as the losses declined by more than 27% during 2014 and 2015.

Even though the financial accounts have not been finalized yet, a surge in losses is expected for 2016. This is due to the fact that the financial expenses have increased as PIA has acquired new aircraft on lease and it has to pay mark up fees on legacy loans etc.

During 2013-14, the fuel prices were very high, rising to even above US$100/Barrel, thus adding significantly towards fuel expenses.  After shortages of aircraft in PIA fleet, aircraft have been obtained on lease (wet lease / dry lease) from different countries and companies. Payment of monthly instalments of the leased aircraft is also a major reason for increase in financial loss and ultimately deficit.