PIA is now canceling local flights as financial crisis worsens

ISLAMABAD – The national flag carrier of Pakistan is unable to operate flights even on a national level now as the financial challenges are preventing routine operations.

The crisis has worsened to such an extent that sources say Pakistan International Airlines (PIA) canceled a number of domestic and international flights in recent days due to cash flow issues.

The severity of the crisis can be gauged from the fact that a number of domestic flights to and from Karachi were canceled as the carrier failed to pay Pakistan State Oil (PSO) for fuel supply.

As per media reports, multiple flights have been called off including two Karachi-Muscat, and two-way domestic flights from Karachi to Faisalabad, Islamabad and Lahore.

Similarly, fights from Karachi to Turbat, Bahawalpur, and Sukkur have also been canceled, Geo News reported citing sources.

Those privy to the developments opine that the national flag carrier has requested the government for immediate provision of funds to stay operational.

The financial challenges have exacerbated to the extent that the staff salaries are being delayed. Confirming the same, a PIA spokesperson said the top management is engaging the Ministry of Finance and the salaries of the employees will be paid as soon as the funds are received.

The national carrier - which was once seen by international carriers as a success story - is also on the brink of grounding 15 planes bringing down the number of operational aircraft further. 

Pakistan International Airlines has to clear dues worth up to Rs20 billion and any delay in payment of the dues pertaining to fuel, federal excise duty (FED) and lease payments might lead to the grounding of 15 planes and further disruption of flight operations. 

PIA's challenges worsened after it was reported this week that the supply of spare parts to the carrier could be suspended over cash flow problems.

Earlier last week, the Economic Coordination Committee (ECC) also discussed issues pertaining to PIA which has been sustaining losses for quite a long period of time now.

After detailed deliberation, the participants decided to constitute a separate committee for the assessment of the restructuring plan of PIA but rejected the PIA's demand for the provision of Rs22.9 billion and deferment of Rs1.3 billion per month to the Federal Bureau of Revenue (FBR) as well as loans and markup amount till the finalization of the restructuring plan.

During the meeting, the secretary Aviation gave a detailed briefing to the chair about the financial burdens, liabilities of PIA, and the need for restructuring the state-owned enterprise.

The participants of the high-profile meeting discussed and reviewed the timelines and costs of the restructuring plan and after detailed discussion, it was decided to constitute a separate committee for the assessment of PIA's restructuring plan.

The participants also came to the conclusion that the Finance Division and State Bank of Pakistan would support PIA in dealing with its financial challenges after a concrete plan for restructuring the airlines was finalized and submitted to the satisfaction of the committee.

There have been demands for privatizing the national carrier due to its economic nonviability. Former Aviation Minister Khawaja Saad Rafique also stressed the importance of privatizing the carrier or else it would have to shut operations.

In the final days of the PDM regime, it was also decided to privatize loss-making Pakistan International Airlines during a meeting of the Cabinet Committee on Privatization chaired by then Finance Minister Ishaq Dar.

The committee “after deliberation decided to include Pakistan International Airlines Co. Ltd. in the list of active privatization projects of the ongoing privatization program, following an amendment in the law by the Parliament,” a finance ministry statement had said.