In order to survive, Pakistan International Airlines (PIA) has asked the government for yet another bailout package worth Rs. 23 billion.
Last week, the PIA management requested urgent liquidity during a meeting with Dr. Shamshad Akhtar, the interim finance minister. Express Tribune reports that although the caretaker government has not yet given its approval, it has asked the national flag carrier to submit a realistic plan for repaying its debt.
The PIA management revealed the airline’s funding shortfall of Rs. 23 billion to the interim finance minister during the meeting. Shamshad gave PIA the order to secure Rs. 13 billion in sovereign guarantees and the remaining Rs. 10 billion, both from banks, in place of accepting the carrier’s request for a full and direct bailout.
Since its deteriorating financial statements prevented it from acquiring such liquidity on its own, PIA asked the finance minister for help in obtaining such bank loans.
Shamshad gave PIA the task of presenting the federal cabinet with a workable restructuring and privatisation plan. The airline was further urged by the finance minister to present a workable business plan that would not solely rely on grants from the federal government but would also take into account management’s own initiatives.
Although PIA’s ongoing financial issues are concerning, many consider the bigger problem to be the company’s failure to repay debt over the past ten years. Since 2017, at least three PIA restructuring exercises have been completed, but none of them have a solid guarantee of repayment.
Relevantly, during the previous fiscal year, the flag carrier received Rs. 15 billion from the previous administration. The Civil Aviation Authority (CAA) will receive Rs. 4 billion in bridge funding that the finance ministry approved last month; this money will be distributed in 4QFY24.
