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Pakistan International Airlines privatization plan fails due to financial obligations

Islamabad (Pakistan), December 28 (ANI): Pakistan International Airlines (PIA) privatization plan faced setbacks in the coming year as the privatization commission could not resolve issues related to loan repayments and legal matters, ARY News reported on Thursday. .

He reported, citing sources, that the caretaker federal minister for privatization, Fawad Hussain Fawad, had failed to implement the transfer of PIA to the private sector by January 2024.

PIA borrowed over 270 billion Pakistani Rupees (PKR) from commercial banks with government guarantee.

The Ministry of Finance will decide whether to meet the financial requirements of the PIA for the next three months.

Sources suggest that PIA cannot afford to pay more than PKR 8 billion in interest on the PKR 260 billion loan. Commercial banks involved in lending to PIA include National Bank and Punjab Bank, along with eight other commercial banks.

The decision to reschedule government loans until PIA’s privatization could not be finalized. The Ministry of Finance will set up a committee to decide on the financial requirements of the PIA.

Sources told ARY News that the financial affairs of PIA will be handed over to the Privatization Commission as the latter will take steps to reduce its losses.

Sources further claimed that the commission would link the national carrier’s financial affairs with the latest system. By improving the financial affairs of PIA, the commission will improve its balance sheet, which will contribute to the privatization of the carrier.

Earlier, The Express Tribune had reported that employees of Pakistan International Airlines (PIA) were affected due to the financial turmoil faced by the airlines, which left its 7,000 employees without salaries in November.

The airline’s CBA union president Hidayatullah Khan addressed the issue and alleged intentional salary delays on the part of PIA management.

Earlier in October, the financially troubled airline was forced to cancel many domestic and international flights due to limited fuel supplies from Pakistan State Oil (PSO), hampering thousands of passengers, The Express Tribune reported.

National airline PIA has been criticized for inefficiency and has faced dwindling funds as the government battles a balance of payments crisis resulting from huge debt repayments.

According to recent reports, PIA’s liabilities amount to 743 billion Pakistani rupees (PKR) (approximately $2.5 billion), exceeding its total assets by five times.

Additionally, on October 14, PIA requested an additional loan of over PKR 7 billion from banks due to concerns over potential partial or complete disruptions, as reported by The Express Tribune.

Later, PIA, in a letter to the Aviation division, sought an immediate loan of over Rs 7 billion from banks, with the Pakistani government guaranteeing an option to the airline to get a loan of Rs 7.5 billion, a reported The Express Tribune. (ANI)

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