PIA planes likely to be grounded amidst economic crisis
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In Islamabad and Lahore, concerns have arisen regarding the fate of Pakistan International Airlines' (PIA) nine leased planes. Leasing companies have declined assistance due to the airline's financial troubles. Caretaker Prime Minister Anwaarul Haq Kakar has taken action by instructing PIA's management to swiftly present a restructuring plan to the Economic Coordination Committee (ECC) of the Cabinet.
Within PIA's fleet, there are currently four Boeing 777 and five Airbus 320 aircraft acquired through leasing agreements. However, financial constraints prevent the airline from meeting its lease payments, leading to leasing companies' reluctance to collaborate, especially with institutions in countries with CCC credit ratings, including Pakistan.
The outstanding international payments owed by PIA amount to $100 million, encompassing aircraft and engine lease payments, international handling fees, airport charges, and interest on loans. Additionally, the airline is required to pay Rs3 billion to the Federal Board of Revenue (FBR). These financial difficulties have begun affecting Boeing's component services program and Airbus Industries' aircraft repair support, resulting in an increase in PIA plane incidents.
The airline's spokesperson attributed its financial crisis to the country's economic situation and the negative credit rating, which hinders foreign exchange availability. While 2023 has seen positive revenue growth for PIA, the burden of interest payments remains a significant challenge.
During a meeting in Islamabad, the interim prime minister emphasized the importance of PIA's restructuring, enabled by recent amendments to the PIA Act, 2016. He urged the airline's management to enhance connectivity to remote areas and align flight schedules with passenger convenience. PM Kakar fondly recalled PIA's past reputation as one of the world's top airlines and urged the Aviation Division and PIA management to work tirelessly to restore its former glory.
The meeting included the participation of Caretaker Finance Minister Dr. Shamshad Akhtar, advisers to the interim PM Air Marshal (retd) Farhat Hussain and Ahad Cheema, and other officials.
In a noteworthy development, PIA employees ended their 26-day strike after receiving approval for a 20% salary increase for group 1 to 4 workers. A memorandum of understanding was signed to formalize this agreement, marking the successful conclusion of the employees' "salary increase movement."
