PIA gets Rs 1b from CAA to pay staff salaries as financial crisis continues

ISLAMABAD - The employees of the national carrier of Pakistan were bailed out partially by the Civil Aviation Authority as the latter provided funds worth a billion to the carrier.

Sources close to the developments confide that the payment was made to clear the salaries of the carrier's staff.

With the latest financial injection, the staff has been paid their salaries till August though the financial crisis of the airline still exists to this day which recently prompted the grounding of aircraft as well. 

Meanwhile, Pakistan International Airlines (PIA) also secured much-needed Rs18 billion of funds in bank loans on Friday to avoid suspension of flight operations.

“The PIA has obtained a loan of Rs18 billion from two banks which was used to clear the necessary dues,” PIA Spokesperson Abdullah Khan told Geo News.

Besides, in a statement, the spokesperson said that PIA was making the most essential domestic and international payments and the operations are in full flow and all flights are being operated.

“The PIA has a strong network worldwide. The PIA has an adequate number of aircraft for international and domestic flights through which air operations are ongoing," he elaborated.

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

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

Earlier, 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.