Leading aircraft manufacturers Boeing and Airbus are on the verge of halting the supply of spare parts to Pakistan International Airlines (PIA) by mid-September due to the airline’s severe cash flow problems. PIA has informed the Economic Coordination Committee (ECC) of its inability to meet financial obligations to creditors, aircraft lessors, fuel suppliers, airport operators, the International Air Transport Association (IATA), and others, all stemming from a liquidity crisis.
As a consequence of these financial woes, PIA has been compelled to ground five out of its 13 leased aircraft, with an additional four expected to be grounded in the coming week.
PIA has emphasized the necessity of keeping the state-run airline operational in order to determine a fair share price for eventual privatization.
However, during an ECC meeting, the demand from PIA for a bailout of Rs22.9 billion and the deferment of Rs1.3 billion per month to the Federal Bureau of Revenue (FBR), along with loans and interest payments until a restructuring plan is finalized, was rejected.
Instead, the ECC decided to form a separate committee to assess PIA’s restructuring plan. Additionally, the request for deferment of monthly payments to FBR and the Civil Aviation Authority (CAA) was denied. The Finance Division and State Bank of Pakistan were tasked with providing support to PIA once a concrete restructuring plan had been approved by the committee.