PIA's financial tailspin grounds number of flights

KARACHI: The Pakistan International Airlines (PIA) financial crisis turned ugly as number of domestic and international were cancelled due to serious cash flow problems, Geo News learnt on Tuesday.

The sources said that a number of domestic flights to and from Karachi were cancelled as the national flag carrier failed to pay Pakistan State Oil (PSO) for fuel supply.

A number of flights have been called off including two Karachi-Muscat, and two-way domestic ones from Karachi to Faisalabad, Islamabad and Lahore, according to sources.

Similarly, fights from Karachi to Turbat, Bahawalpur, and Sukkur have also been scratched, airline sources said.

The insiders said the national flag carrier has requested the government for immediate provision of funds.

Moreover, the sources said the PIA employees had also not been paid their salaries as well.

A PIA spokesperson in a statement said management is in touch with the Ministry of Finance and the salaries of the employees will be paid as soon as the funds are received.

A day earlier, Geo News citing sources reported that the PIA risks grounding 15 planes amid a significant financial crisis due to growing dues owed by the national carrier.

According to well-placed sources privy to the development, PIA has to clear dues worth up to Rs20 billion. Any delay in timely payment of the dues pertaining to fuel, federal excise duty (FED) and lease payments, might lead to 15 planes being grounded.

More than 30 national flights will be suspended if the planes are grounded, the sources had added.

Meanwhile — commenting on the dire situation — the Ministry of Aviation said that overhauling the PIA is a "complicated" process and will take a year. However, during this time it is imperative to keep the airline operational.

Last week, the national carrier announced the "easing" of its financial challenges following the release of critical funds by the banks as a result of support from the government of Pakistan.

"The funds shall be used to clear long-standing dues of aircraft and engine leases, spare support and handling payments at foreign stations. Restructuring is also on track," the national carrier said.

PIA's financial woes

On September, the PIA had said it grounded five out of its 13 leased aircraft with further prospect of grounding four additional plane due to the prevailing financial crunch.

The PIA had asked for an emergency bailout of Rs22.9 billion which was rejected by the Economic Coordination Committee (ECC).

The ECC also rejected the request for deferment of the payments of Rs1.3 billion per month, which PIA pays to FBR against FED and Rs0.7 billion per month which PIA pays to the Civil Aviation Authority (CAA) against embarking charges.

The airline had also warned that Boeing and Airbus might suspend the supply of spare parts by mid-September.

Last month, the FBR froze 13 PIA bank accounts due to non-payment of Rs8 billion in FED.