PIA secures $130 million multi-tranche financing facility

KARACHI: State-run Pakistan International Airlines (PIA) has signed a $130 million multi-tranche financing facility to fund its capital requirements and improve, the company announced on Thursday.

United Bank Limited Pakistan and Credit Suisse, Singapore office acted as the lead arrangers for the financing, the airlines said in a statement. “The agreement to this affect was recently signed in Dubai. The lenders include Credit Suisse, United Bank Limited and the National Bank of Pakistan,” it added.

The airline said the facility reflects the confidence and trust of the international financing institutions on the operations of PIA and “will be utilised by the corporation for its general working capital requirements and improvement in passenger services.”

The airline, earlier this week, said it is evaluating an order for wide-body Airbus and Boeing jets to upgrade its ageing fleet. The airline is looking at Boeing 777X,  Airbus A330 and A350 models

Bernd Hildenbrand, chief operating officer at the airline last month sad PIA is committed to expand its fleet from current 38 aircraft to 100 aircraft till 2025. The plan is to operate about 60 aircraft in 2020; 100 aircraft by 2025.

PIA has a fleet of 38 narrow-body and wide-body Airbus and Boeing jets, with three A310s to be retired on December 31. The airline would consider buying the aircraft directly from the manufacturer and financing the order through a sale and leaseback arrangement. It would also consider a direct leasing agreement, known as a dry lease.

However, a senior official at the airline said there is no plan to use the secured financing for buying or leasing of new aircraft.  But, part of amount may be used for lease payments of already acquired planes,” he added. “The financing will not come in lump sum but in we will get it in installments.”  Prime Minister Nawaz Sharif had made the privatisation of PIA a top goal when he came to power in 2013. However, those plans were abandoned earlier this year after crippling strikes by staff protesting against privatisation, and a new turnaround strategy drawn up.

PIA is also reviewing the number of people required for its current fleet and operations, an exercise initiated to opt for right sizing. The airline also planned to cut its 18,000 workforce by between 3,000 and 3,500 employees by the end of 2017.

As part of the turnaround, the airline will spin-off four "special business units" from January 2017, starting with its catering business and later its flight training, engineering and courier businesses.  

The management is aiming at appointing most suitable people at every position. For this purpose new recruitment would also be done soon particularly for pilots, flight attendants, and cabin crew.