Pakistan International Airlines Faces the Possibility of Grounding 15 Aircraft Due to Financial Crisis

12 September, 2023 | Muskan Menghani

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The Ministry of Aviation has acknowledged that revitalizing PIA is a complex process that could take a year to complete.

Pakistan International Airlines (PIA) is currently facing the threat of grounding 15 of its aircraft due to an outstanding debt of up to Rs 20 billion. Additionally, sources indicate that over 30 flights may be suspended if these planes are indeed grounded. This situation has arisen primarily due to delayed payments for fuel, Federal Excise Duty (FED), and lease obligations.

The Ministry of Aviation has acknowledged that revitalizing PIA is a complex process that could take a year to complete. However, it emphasizes the importance of keeping the national carrier operational during this time.

Notably, PIA recently announced some financial relief after receiving essential funds from banks, thanks to the support of the Pakistani government. These funds will be used to settle longstanding debts related to aircraft and engine leases, spare parts, and handling fees at foreign locations. The airline is also actively working on its restructuring.

Earlier, PIA had grounded five of its 13 leased aircraft due to unpaid dues, with the possibility of grounding an additional four planes. However, the request for an emergency bailout of PKR 22.9 billion and the plea for deferred payments of PKR 1.3 billion per month to the Federal Board of Revenue (FBR) were both rejected by the Economic Coordination Committee (ECC). This decision came despite PIA’s dire financial circumstances and its inability to meet these financial obligations.

Furthermore, there are concerns that Boeing and Airbus may halt the supply of spare parts by mid-September, which could exacerbate the airline’s operational challenges.

In July, the FBR froze PIA’s account due to unpaid taxes exceeding Rs 2 billion. This followed a similar incident in January of the previous year when the FBR froze 53 of PIA’s bank accounts because of outstanding taxes totaling Rs 26 billion. However, those bank accounts were subsequently reinstated after PIA assured the authorities of prompt tax clearance.

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