Pakistan International Airlines (PIA) seeks a freeze on domestic loan repayments in order to bridge a Rs. 153 billion annual gap between revenue and expenditure.
Talks have been underway between the flag carrier and the Finance Ministry on refinancing the airline’s Rs. 260 billion domestic debt owed to nine commercial banks. According to Express Tribune, the government has chosen to privatize PIA, but the company’s management wants six to eight months to complete corporate restructuring.
PIA has determined a monthly requirement of Rs. 13 billion to cover debt repayments on schedule. Management has assessed its monthly sales at roughly Rs. 22 billion, and Rs. 35 billion in expenses, thus translating into a monthly shortfall of approximately Rs. 13 billion.
The airline has made it clear to the authorities that debt restructuring is necessary for it to be financially viable. It requested a freeze on both principle and interest payments but the proposal was rejected by the Ministry of Finance.
PIA has already proposed splitting itself in two and relocating its historical debt and subsidiaries to a new entity, but it has been pointed out that the process will take up to a year.
PIA’s monthly fuel costs are estimated at above Rs. 8 billion, and this figure is expected to rise further. Its monthly pay expense is Rs. 1.1 billion, with a monthly pension bill of Rs. 350 million.
The airline needs Rs. 1.8 billion every month to pay the Civil Aviation Authority and another Rs. 1.3 billion to the Federal Board of Revenue. It bears mentioning that the finance ministry has already declined any budgetary support to the PIA.
Meanwhile, the flag carrier is frequenting several avenues to get a bailout, even though the Finance Division is no longer interested in providing the company with anything of the sort.