Pakistan International Airlines (PIA) has requested another Rs. 23 billion rescue package from the government in order to stay afloat.
The caretaker setup has not yet accepted the demand and has instead requested the national carrier’s management to present a feasible restructuring plan.
According to those familiar with the discussions, the PIA management met with caretaker Finance Minister Dr. Shamshad Akhtar this week and requested Rs. 23 billion in financing.
However, they cautioned that the airline would not be able to receive the bailout package right once.
Condition of PIA Right Now
The PIA is the country’s largest public-sector loser, and successive governments have spent money from the budget to keep it going.
However, there is no intention to establish professional management, and the national carrier’s affairs are being handled by air force officials who have no expertise running commercial airlines.
During the meeting, the national carrier management advised the caretaker finance minister of a Rs. 23 billion funding shortage.
The finance ministry, on the other hand, instructed it to prepare Rs. 13 billion in bank money against the available space of yearly sovereign guarantees ceiling.
To maintain a stable posture, the government upped the limit of national guarantees to approximately Rs. 263 billion in the previous fiscal year.
In the event that the national carrier fails to service its debt, the banks can cash these national guarantees.
The ministry also informed the national carrier that the remaining Rs. 10 billion should be obtained through banks.
The PIA sought the finance minister’s involvement to obtain bank loans since its financial sheet could not withstand additional borrowings.
Losses Facing By PIA
According to its balance sheet, the PIA’s quarterly losses increased by 170% during the first three months of this year, reaching Rs. 36.8 billion.
The airlines’ total losses have risen to Rs. 686.7 billion. Its current liabilities exceed its assets by Rs. 369 billion.
The finance minister directed the airline to deliver to the federal cabinet a restructuring and privatization proposal.
The previous administration changed the PIA Act near the conclusion of its term to allow the sale of its majority shares and transfer of management control to private buyers.
National Carrier’s Privatization
In 2016, parliament imposed restrictions on the sale of more than 49% of a company’s stock and management transfers, thus halting the PIA’s privatization process.
According to sources, the finance minister asked the airline to create a realistic business strategy that should include management’s own efforts rather than relying just on federal government handouts.
To read our blog on “UAE Passenger accuses PIA to steal 93K dirhams gold jewelry,” click here.
