Tuesday April 16, 2024

PIA risks suspending 30 flights amid growing financial crisis

The national career has to clear dues worth up to Rs20 billion

By Tariq Abul Hasan
September 11, 2023
An aeroplane of the national flag carrier of Pakistan is seen in this file photo. — AFP
An aeroplane of the national flag carrier of Pakistan is seen in this file photo. — AFP

KARACHI: The Pakistan International Airlines (PIA) is at risk of suspending 30 national flights as it struggles to clear dues worth Rs20 billion.

Sources said that the national carrier might be forced to ground 15 planes if it fails to clear the dues regarding fuel, federal excise duty (FED) and lease payments.

Commenting on the dire situation, the Ministry of Aviation said that overhauling the PIA is a "complicated" process and will take a year. However, during this time it is imperative to keep the national career operational.

The development comes as last week, the national carrier announced the "easing" of its financial challenges following the release of critical funds by the banks as a result of support from the government of Pakistan.

"The funds shall be used to clear long-standing dues of Aircraft and engine leases, spare support and handling payments at foreign stations. Restructuring is also on track," the national carrier said.

PIA's financial woes

Last week, the PIA grounded five out of its 13 leased aircraft with further prospect of grounding four additional planes due to the prevailing financial crunch.

The PIA had asked for an emergency bailout of Rs22.9 billion which was rejected by the Economic Coordination Committee (ECC).

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 national carrier had also warned that Boeing and Airbus might suspend the supply of spare parts by mid-September.

Last month the Federal Bureau of Revenue (FBR) froze 13 PIA bank accounts due to non-payment of Rs8 billion in FED.