Pakistan International Airlines (PIA) is teetering on the brink of grounding more aircraft as it grapples with a severe cash flow crisis. The national flag carrier has already grounded five of its 13 leased aircraft, with four more facing a similar fate, according to the Ministry of Aviation. This dire situation arises as both Boeing and Airbus are on the verge of discontinuing the supply of spare parts by mid-September.
The ministry issued a stern warning to the federal government, highlighting PIA’s arrears with creditors, aircraft lessors, fuel suppliers, insurers, and international and domestic airport operators, among others. Additionally, the International Air Transport Association (IATA) is also owed outstanding payments.
To address these pressing financial challenges, the ministry has urgently requested Rs. 23 billion and the suspension of duties, taxes, and service charges to domestic agencies. However, this request lacks a concrete and viable business plan.
The complexity of PIA’s restructuring, expected to span approximately eight months, adds to the mounting concerns. The government of Pakistan, which holds a 92 percent share in PIA, faces the challenge of keeping the airline operational throughout the restructuring process.
PIA’s financial woes date back to the late 1990s, attributed to competition from emerging regional airlines, internal mismanagement, and insufficient funding for fleet expansion. As of 31 December 2022, PIA’s debt and liabilities stood at Rs. 743 billion, five times more than the total value of its assets.
Source: Pro Pakistani