ISLAMABAD – Pakistan International Airlines’ request for a bailout package worth Rs 23 billion was turned down by the Finance Division, it emerged on Monday.
The cash-strapped national carrier had sought a bailout package from the government to remain afloat; however, the request was denied after the caretaker regime advised the carrier to prepare a feasible restructuring plan.
The PIA management also met caretaker Finance Minister Dr Shamshad Akhtar but was unable to convince the minister on the bailout package.
Media reports say that the Finance Division instructed the management to seek loans from commercial banks instead of relying on the government.
The finance ministry asked PIA to arrange Rs13 billion in funds from the banks against the available space of the annual sovereign guarantees limit while the rest of the Rs10 billion should also be arranged from the banks, Express Tribune reported.
Meanwhile, PIA sought the finance minister’s intervention to seek loans from the banks, as its balance sheet did not support additional borrowings.
It bears mentioning that the carrier has been facing a financial crisis for years now. 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 said.
The participants of the meeting also supported the hiring of a financial adviser to process the transaction of Roosevelt Hotel, New York, an asset of PIA Investment Limited.
The decision to privatize PIA comes amid measures to reduce the losses of the national exchequer through different state-owned enterprises; the national carrier is also set to resume flights to the United Kingdom and other European destinations by October.
Recently, it was also disclosed that the carrier has grounded 11 planes, reducing its fleet to merely 20 aircraft.
The grounded aircraft include three Boeing 777s, as Pakistan International Airlines faces a serious financial crisis due to the depreciation of Pakistani currency and an increase in prices of petroleum products.
