The Finance Ministry has expressed concern over continuous borrowing by the Pakistan International Airlines Company Limited (PIACL). It went on to say that PIA, as a commercial entity, is on the verge of ‘belly-landing’, due to constantly getting loans.
Belly-landing is when a plane crash lands on its under-side without deploying the landing gear.
The ministry made these comments after PIA submitted a new request for additional guarantees of Rs. 15.5 billion to keep the flag carrier afloat.
The national flag carrier has been facing liquidity issues even for its daily operations. The ministry reveals that the Economic Coordination Committee (ECC) has already approved over Rs. 24 billion worth of GoP guarantee in the financial year 2018-19, exclusively for engine overhaul requirements.
However, no visible improvement has been seen in the airline’s commercial operations.
The ministry further stated that apart from the engine overhaul, the current level of GoP guarantee stands at Rs. 187 billion. Moreover, the Finance Division has been servicing PIA’s borrowing with a budgetary allocation of Rs. 18 billion for the current financial year.
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On January 1, 2019, the Prime Minister approved some short-term measures for PIA’s revival. These steps included the Hajj 2019 operation, recovery and acquisition of ground support equipment, recovery of grounded aircraft, restoration of the in-flight entertainment system, and long over-due payments to the vendors for supplies and services.
According to the Civil Aviation Division, the airline is taking route rationalization initiatives, but the grounded aircraft are limiting the airline’s capabilities.
PIA is trying to ready the grounded aircraft for operation on an urgent basis. However, it needs an additional guarantee of up to Rs. 5.6 billion for maintenance of engines and procurement of related spare parts.
CAD also divulged that PIA is facing pressure for the payment of accumulated liabilities. Amid the cash flow crises, the airline is seeking an additional guarantee of Rs. 8.4 billion for payment to vendors and for repair/acquisition of ground support equipment.
Furthermore, for the repair of In-flight Entertainment Systems (IFE), the airline is seeking a cash grant of Rs. 485 million.
Via: B.Recorder
