Pakistan PIA's financial struggles reach breaking point, sparks privatization move

Islamabad, Sep 17, 2023, IANS

Pakistan's flagship airline has become a massive financial liability for the government for years, as it slips further more into crisis every year, forcing a bailout injection of billions of Pakistani rupees to keep it running. However, the government has now decided to let go of the airline and has called for a privatisation plan. 

Pakistan International Airlines (PIA) has had its fresh episode of financial crisis as it failed to pay the Pakistan State Oil (PSO) for fuel supply, causing flight delays, disruption in flight schedule and cancellation of flights, causing serious disturbance for its customers and passengers.  
 
As per sources in PIA, at least five flights had to be cancelled due to lack of available aircraft. Among these flights were domestic flights flying to and from major cities of the country. There were also delays of about 2 hours witnessed in other domestic flight operations.  
 
The reason behind this was shortage funds with PIA to pay to PSO for fuel. Pakistan's Federal Ministry for Finance has refused to bare the losses incurred by its flagship airline any further, taking a decision to privatize PIA, seeking a privatization plan both from the Privatization Division and the airline's administration. 
 
"PIA, which is already faced with a cash crunch and mounting losses, if faced with over Rs 420 million per day due to aircraft grounding. Governments have been bailing it out every year for a very long time. Now, it seems almost impossible," said economist Irshad Ansaari. 
 
However, PIA spokesperson says that some financial assistance has come its way, allowing it to push its engines roar back to life. 
 
"The on-time departure ratio is expected to 72 per cent now," said PIA spokesperson. 
 
Another source in PIA said that flight operations have started to gradually return to normal as a total of 72 flights (18 domestic and 54 international flights) were scheduled to depart from airports across Pakistan on Sunday. 
 
In the meanwhile, Shamshad Akhtar, the interim-Finance Minister has revealed that the national flag carrier was incurring confounding losses of at least Rs 12 billion every month. 
 
She said that PIA has several times opted to taking loans of Rs 260 billion from commercial banks, which were guaranteed by the government, in order to stay afloat. 
 
An official of the Federal Board of Revenue (FBR) revealed that PIA owes about Rs 1.25 billion in taxes, while it pays about Rs 1 billion per month to the civil aviation authority. 
 
"PIA's monthly expenses are about Rs 34 billion, while its monthly income stands at Rs 22 billion. This leaves it with an unsound deficit, that keeps piling with every passing month," said economist Talib Fareedi. 
 
“The overall deficit of PIA, as it stands currently comes up to about Rs.740 billion, a staggering figure which has prompted the finance ministry for an immediate privatization plan”, he added. 
 
Pakistan government’s Cabinet Committee on Privatization (CCOP) has already given approval for the privatization of PIA. 
 
The government has directed the newly appointed privatization minister Fawaz Hasan Fawad to accelerate the process of privatizing PIA.  
 
“The proposed plan aims to swiftly implement the privatization of the state-owned entity, due to the fact that the airline debt size is five times greater than the value of its assets”, said a source in the Finance Minister of Pakistan.