Pakistan International Airlines (PIA) finds itself at the precipice of asevere aircraft grounding crisis due to an acute shortage of funds. Thenational flag carrier has already taken the drastic step of grounding fiveout of its 13 leased aircraft, with an additional four aircraft on thebrink of facing a similar fate, as reported by the Ministry of Aviation.
This dire predicament is further exacerbated by the looming threat of bothBoeing and Airbus discontinuing the supply of essential spare parts, asituation expected to come to fruition by mid-September.
The Ministry of Aviation has issued a stern warning to the federalgovernment, underscoring PIA’s mounting debts to creditors, aircraftlessors, fuel suppliers, insurers, and international and domestic airportoperators, among others. Moreover, the International Air TransportAssociation (IATA) also awaits outstanding payments from the beleagueredairline.
To tackle these urgent financial challenges, the ministry has urgentlyrequested a substantial sum of Rs. 23 billion and the suspension of duties,taxes, and service charges imposed by domestic agencies. However, thisrequest is notably lacking a concrete and viable business plan, furthercomplicating the situation.
The complexity of PIA’s anticipated restructuring, spanning approximatelyeight months, adds to the growing concerns. The government of Pakistan,which maintains a substantial 92 percent share in PIA, faces the formidabletask of ensuring the airline’s operational continuity throughout thechallenging restructuring process.
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PIA’s financial struggles trace their roots back to the late 1990s,primarily attributed to stiff competition from emerging regional airlines,internal mismanagement, and inadequate funding for expanding its aircraftfleet.
By the end of December 2022, PIA had amassed a staggering debt andliabilities totaling Rs. 743 billion, a staggering five times higher thanthe cumulative value of its assets. This longstanding financial burdencontinues to haunt the airline, posing a substantial threat to its futureviability and operations.
