Pakistan’s caretaker government has rejected an urgent appeal from for another PKR23 billion rupees (about USD76 million) bailout, instead directing the majority state-owned carrier to secure commercial bank loans against a partial government guarantee, and suggesting it develop a viable restructuring and privatization plan.
A national news publication reports that the airline had met with interim finance minister Shamshad Akhtar last week and informed her that it had a financing gap of PKR23 billion. However, Akhtar instructed the airline to arrange commercial loans for the total amount, of which the government was prepared to guarantee a limited amount of PKR13 billion (USD42.7 million). He also instructed the airline to present a restructuring and privatization plan to the federal cabinet which should reflect the airline’s efforts to improve its financial situation instead of relying solely on government aid.
In the previous fiscal year, PIA received PKR15 billion (USD49.3 million) out of its PKR 22 billion (USD72 million) demand for interest cost payment. Additionally, the finance ministry provided PKR4 billion (USD13.1 million) for settling Civil Aviation Authority dues. The aviation ministry has also requested the continuation of a government facility to cover interest costs.During the previous fiscal year, the government raised the cap on sovereign guarantees to more than PKR263 billion (USD 864.7 million) and increased borrowing by PIA to ensure its financial stability.The airline is the nation’s largest money-losing public sector entity, and successive governments have pumped in funds to keep it operational.
The airline is currently led by Air Force officers without experience in commercial airline management.During the first three months of 2023, PIA’s losses increased by 170% to PKR36.8 billion (USD121 million). Cumulative losses have reached PKR686.7 billion (USD2.2 billion), with liabilities exceeding assets by PKR369 billion (UDSD1.2 billion).In 2016, parliamentary regulations limited the sale of shares and transfer of management of PIA not to exceed 49%, effectively halting privatisation efforts. In a later move, the prior government amended the PIA Act to permit the sale of a majority of its shares and the shift of management control to private investors.
