PIA’s crisis deepens as spare parts supply likely to be suspended soon


ISLAMABAD – The cash-strapped national carrier of Pakistan has warned of further deterioration as Boeing and Airbus are likely to suspend the supply of spare parts to the firm.

Pakistan International Airlines has informed the government that the supply could be suspended by mid-September due to “serious cash flow problems”. 

The shocking revelation was made in a summary sent to the Economic Coordination Committee (ECC) aimed at seeking an emergency bailout.

The carrier told the high-level committee that it was unable to pay its creditors, aircraft lessor, fuel suppliers, airport operators, International Air Transport Association (IATA), and others due to a liquidity crunch, Geo News reported.

PIA further said it was forced to ground five out of 13 leased aircraft, while four additional aircraft are likely to be grounded this week due to the ongoing crisis. In the document submitted to the ECC, PIA also highlighted that keeping the airline operational was necessary to determine the fair price of its shares for privatization.

A day earlier, the participants of the ECC rejected the PIA’s demand for the provision of Rs22.9 billion and deferment of Rs1.3 billion per month to the Federal Bureau of Revenue (FBR) as well as loans and markup amount till the finalization of the restructuring plan.

During the meeting, the secretary Aviation gave a detailed briefing to the chair about the financial burdens, liabilities of PIA, and the need for restructuring the state-owned enterprise.

The participants of the high-profile meeting discussed and reviewed the timelines and costs of the restructuring plan and after detailed discussion, it was decided to constitute a separate committee for the assessment of PIA’s restructuring plan.

Meanwhile, the ECC also rejected the request for deferment of the payments of Rs1.3 billion per month, which PIA pays to FBR against Federal excise duty (FED), and Rs0.7 billion per month which PIA pays to the Civil Aviation Authority (CAA) against embarking charges.

The participants also came to the conclusion that the Finance Division and State Bank of Pakistan would support PIA in dealing with its financial challenges after a concrete plan for restructuring the airlines was finalized and submitted to the satisfaction of the committee.

There have been demands for privatizing the national carrier due to its economic nonviability. Former Aviation Minister Khawaja Saad Rafique also stressed the importance of privatizing the carrier or else it would have to shut operations.

In the final days of the PDM regime, it was also decided to privatize loss-making Pakistan International Airlines during a meeting of the Cabinet Committee on Privatization chaired by then Finance Minister Ishaq Dar.

The committee “after deliberation decided to include Pakistan International Airlines Co. Ltd. in the list of active privatization projects of the ongoing privatization program, following an amendment in the law by the Parliament,” a finance ministry statement said.

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