9 out of 15 PIA planes grounded showing worst ever financial crisis
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Pakistan International Airlines (PIA) finds itself at the precipice of a severe aircraft grounding crisis due to an acute shortage of funds. The national flag carrier has already taken the drastic step of grounding five out of its 13 leased aircraft, with an additional four aircraft on the brink of facing a similar fate, as reported by the Ministry of Aviation.
This dire predicament is further exacerbated by the looming threat of both Boeing and Airbus discontinuing the supply of essential spare parts, a situation expected to come to fruition by mid-September.
The Ministry of Aviation has issued a stern warning to the federal government, underscoring PIA's mounting debts to creditors, aircraft lessors, fuel suppliers, insurers, and international and domestic airport operators, among others. Moreover, the International Air Transport Association (IATA) also awaits outstanding payments from the beleaguered airline.
To tackle these urgent financial challenges, the ministry has urgently requested a substantial sum of Rs. 23 billion and the suspension of duties, taxes, and service charges imposed by domestic agencies. However, this request is notably lacking a concrete and viable business plan, further complicating the situation.
The complexity of PIA's anticipated restructuring, spanning approximately eight months, adds to the growing concerns. The government of Pakistan, which maintains a substantial 92 percent share in PIA, faces the formidable task of ensuring the airline's operational continuity throughout the challenging restructuring process.
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 aircraft fleet.
By the end of December 2022, PIA had amassed a staggering debt and liabilities totaling Rs. 743 billion, a staggering five times higher than the cumulative value of its assets. This longstanding financial burden continues to haunt the airline, posing a substantial threat to its future viability and operations.
