Due to unpaid dues, Pakistan State Oil (PSO) has ceased supplying fuel to Pakistan International Airlines (PIA) at Multan, Sukkur, and Gilgit airports, further worsening the dire financial situation of the national flag carrier.
This suspension of fuel supply on Monday resulted in the cancellation of 14 flights operating between Multan, Karachi, Sukkur, Islamabad, and Gilgit. According to sources, PIA’s outstanding debt to PSO amounts to Rs650 million, in line with the agreed-upon payment schedule.
In a report published by The Express Tribune on Sunday, it was disclosed that PIA has made a request for an additional loan of over Rs7 billion from banks. This request was prompted by concerns over the potential partial or complete suspension of flight operations due to a severe financial crisis.
The report also indicated that PIA had written to the Aviation Division, urgently seeking a loan exceeding Rs7 billion from banks. Notably, the government of Pakistan’s guarantee includes the option for the airline to secure a loan of Rs7.5 billion.
Curiously, no bank has displayed any interest in extending a loan to the airline. The letter further highlighted that due to financial constraints, fuel supply in Jeddah and Dubai had been halted, and the state-owned oil marketing company PSO had refused to provide fuel to the airline.
Additionally, the letter raised concerns about the potential suspension of its membership in the International Air Transport Association (IATA) at any time, and the Federal Board of Revenue (FBR) had issued notices to the airline. The letter, dispatched by the General Manager of Funds Management to the Deputy Director of the Division, implored the Ministry of Finance to step in immediately and instruct banks to furnish a loan of Rs7.5 billion under the government’s guarantee.
On September 22 of the previous month, the interim privatization minister had made an announcement that the government would not ground PIA, despite it being the most loss-making enterprise, and assured that no employees would be laid off, even after privatization.
These declarations came shortly after interim Finance Minister Dr. Shamshad Akhtar had reiterated the government’s commitment to providing support to sustain PIA’s operations.
As per a report, it appeared that these two separate statements were made to pacify interest groups that were working to rescue the airline, despite its dire financial predicament.
“The prime minister has instructed me that PIA would not be grounded. We have already worked out a way to keep PIA flying,” Minister for Privatization Fawad Hassan Fawad remarked in response to a question during a press conference.
Previously, PIA had requested a moratorium on repaying its domestic debt to bridge an annual deficit of Rs153 billion between its sales and essential expenses.
Discussions had been ongoing between PIA management and the Ministry of Finance regarding the restructuring of the airline’s domestic debt, which amounts to about Rs260 billion and is owed to nine commercial banks. Fawad mentioned that he was reviewing a plan proposed by PIA and had not yet made a decision.
“We will have to support PIA, as the government holds a 92% stake in the airline,” Dr. Shamshad Akhtar stated during a separate press conference on the same day. She added, “If necessary, the government will also restructure PIA’s debt, but the final decision will be made by the privatization minister.”
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