The Pakistan International Airlines (PIA) is facing a severe financial crisis, resulting in the cancellation of several domestic and international flights, as well as delays in paying employee salaries.
The airline's inability to settle dues with Pakistan State Oil (PSO) for fuel supply has led to this precarious situation.
Numerous flights, including two Karachi-Muscat routes and domestic flights connecting Karachi to Faisalabad, Islamabad, and Lahore, have been canceled due to cash flow problems. Additionally, services from Karachi to Turbat, Bahawalpur, and Sukkur have also been scratched, according to insiders.
PIA's plea for immediate funding
In response to the financial crisis, the national flag carrier has urgently requested government assistance to address its mounting financial obligations. The airline's employees have also reportedly not received their salaries.
A PIA spokesperson has reassured employees that the management is actively engaged with the Ministry of Finance, and once the necessary funds are received, employee salaries will be promptly disbursed.
Risk of grounding 15 planes looms
The financial woes faced by PIA have raised concerns about the potential grounding of 15 planes. The airline reportedly owes up to Rs20 billion in dues related to fuel, federal excise duty (FED), and lease payments.
Delays in clearing these dues could have severe consequences, including the grounding of a significant portion of the airline's fleet.
If the 15 planes are grounded, over 30 national flights could be suspended, exacerbating the challenges faced by passengers and the aviation sector.
The Ministry of Aviation has acknowledged the complexity of overhauling PIA, stating that it will require approximately a year to complete. However, during this critical period, it is essential to ensure the continued operation of the airline.
Recent funding
PIA recently announced the easing of its financial difficulties following the release of vital funds by banks with support from the government. These funds are earmarked for settling long-standing dues, including aircraft and engine leases, spare support, and handling payments at foreign stations. The airline has also highlighted that its restructuring efforts remain on track.
The PIA has been grappling with financial issues, with a request for an emergency bailout of Rs22.9 billion being rejected by the Economic Coordination Committee (ECC). Furthermore, the ECC turned down requests for the deferment of monthly payments of Rs1.3 billion to the Federal Board of Revenue (FBR) for FED and Rs0.7 billion to the Civil Aviation Authority (CAA) for embarking charges. Boeing and Airbus also threatened to suspend the supply of spare parts by mid-September, posing additional challenges.
FBR's action
In a previous development, the FBR froze 13 PIA bank accounts due to non-payment of Rs8 billion in FED, further exacerbating the airline's financial predicament.
The PIA's financial crisis remains a pressing issue, requiring immediate attention and solutions to ensure the stability of Pakistan's national carrier and the convenience of air travelers.
