Pakistan State Oil (PSO) has cut off gasoline to Pakistan International Airlines (PIA) at the airports in Multan, Sukkur, and Gilgit, further compromising the already perilous status of the country’s flag carrier.
PIA flights cancelled: Due to the Monday gasoline supply interruption, 14 flights between Multan, Karachi, Sukkur, Islamabad, and Gilgit were cancelled. PIA owes PSO Rs650 million in accordance with the agreed-upon schedule, sources claim.
In response to worries that a serious financial crisis could result in a partial or total suspension of its flight operations, The Express Tribune reported on Sunday that PIA had requested extra borrowing from banks totaling more than Rs7 billion.
The report claims that PIA wrote to the Aviation Division asking an immediate bank loan of more over Rs7 billion. The letter further mentioned that the airline has the choice to obtain a Rs7.5 billion loan as part of the government of Pakistan’s guarantee.
It’s interesting that no bank has expressed interest in lending money to the airline.
The letter also mentioned that financial issues had led to the suspension of fuel supply in Jeddah and Dubai, and the state-owned oil marketing business PSO had declined to provide fuel to the airline.
It further said that the Federal Board of Revenue (FBR) had sent letters to the airline and that the International Air Transport Association (IATA) could revoke its membership at any time.
In a letter to the Deputy Director Division, the General Manager of Funds Management pleaded with the Ministry of Finance to step in right away and direct banks to grant a loan of Rs7.5 billion with the backing of the government.
“Government’s Mixed Messages Regarding PIA Privatization and Financial Support”
On September 22 of last month, the caretaker privatisation minister declared that they would not make any job cuts even after privatization and that the government would not ground PIA, despite it being the largest loss-making enterprise.
These declarations followed Dr. Shamshad Akhtar’s declaration that the government will support PIA’s continued operation as interim finance minister.
“A study suggests that someone made these two distinct remarks to appease lobbies attempting to salvage the airline, despite its serious financial difficulties.”
“I have been told by the prime minister that PIA would not be grounded. In response to a query during a news conference, Minister for Privatisation Fawad Hassan Fawad stated, “We have already figured out a solution to keep PIA flying.
Prior to now, PIA had asked for a delay in the repayment of its domestic debt in order to close a Rs153 billion gap between its yearly sales and necessary expenditures.
The Ministry of Finance and PIA management had been in talks on restructuring the airline’s domestic debt, which totals roughly Rs260 billion and is due to nine commercial banks. Fawad claimed he was considering a strategy offered by PIA and hadn’t made up his mind yet.
In accordance with its strategy, PIA will restructure its debt, withhold tax payments to the FBR, stop paying taxes and charges to the Civil Aviation Authority (CAA), and make no administrative reforms.
In a separate press conference that day, Dr. Shamshad Akhtar stated, “We would have to help PIA because the government owns a 92% interest in the airline.
She stated that the privatisation minister would make the final decision regarding the restructuring of PIA’s debt if necessary.