Government rejects PIA's Rs23 billion bailout request
The Finance Division of Pakistan has declined
Pakistan International Airlines' (PIA) plea for a bailout package amounting to
Rs 23 billion.
The financially strained national airline had
requested a bailout package from the government to address its financial
challenges. However, the request was turned down by the caretaker
administration, which suggested that the airline formulate a viable
restructuring plan.
Despite meeting with the caretaker Finance
Minister, Dr. Shamshad Akhtar, the PIA management was unsuccessful in
persuading the minister to approve the bailout package.
Reports from the media indicate that the
Finance Division advised PIA's management to explore the option of obtaining
loans from commercial banks rather than relying on government assistance.
According to the Finance Ministry's
instructions, PIA was directed to secure Rs 13 billion from banks within the
available limit of annual sovereign guarantees. The remaining Rs 10 billion
should also be arranged through bank loans, as reported by the Express Tribune.
Meanwhile, PIA has requested the finance
minister's intervention in securing loans from banks, as its financial
statements cannot accommodate additional borrowing.
It is worth mentioning that the airline has
been grappling with a financial crisis for several years. Former Aviation
Minister Khawaja Saad Rafique had also emphasized the necessity of privatizing
the airline; otherwise, it might face cessation of operations.
During the final days of the PDM regime, a
decision was made to privatize the loss-making Pakistan International Airlines
in a meeting of the Cabinet Committee on Privatization, chaired by then Finance
Minister Ishaq Dar.
The committee, after careful consideration,
opted to include Pakistan International Airlines Co. Ltd. in the roster of
active privatization projects within the ongoing privatization program. This
decision followed an amendment in the law by the Parliament, as stated in a
finance ministry announcement.
The meeting participants also endorsed the
appointment of a financial advisor to facilitate the transaction related to
Roosevelt Hotel, New York, an asset owned by PIA Investment Limited.
The move to privatize PIA comes amidst efforts
to curtail the losses incurred by state-owned enterprises, contributing to the
national exchequer. The national carrier is also scheduled to resume flights to
the United Kingdom and other European destinations by October.
Recent revelations indicate that the airline
has grounded 11 aircraft, significantly reducing its fleet to only 20 planes.
The grounded aircraft include three Boeing
777s, as Pakistan International Airlines grapples with a serious financial
crisis due to currency depreciation and rising petroleum product prices.
Source: Daily Pakistan