PIA’s leased planes may be grounded

Leasing firms refuse to work with institutions in CCC credit-rated countries

ISLAMABAD/LAHORE:

It is being feared that the Pakistan International Airlines’ (PIA) nine leased planes would be grounded after the leasing companies’ refusal to help it while caretaker Prime Minister Anwaarul Haq Kakar on Tuesday ordered the management of the national flag carrier to present its restructuring plan to the Economic Coordination Committee (ECC) of the Cabinet as soon as possible.

Sources said the national airline currently had four Boeing 777 and five Airbus 320 aircraft acquired on lease in its fleet but it was unable to pay for them because of its financial difficulties.

They added that the leasing companies had refused to work with institutions in the CCC credit-rated countries, which included Pakistan.

The PIA has to give away $100 million in international payments. This amount includes aircraft and engine lease payments as well as international handling and airport charges. The sum also includes interest payments on loans.

The sources said the national flag carrier also has to pay Rs3 billion to the Federal Board of Revenue (FBR).

They added that Boeing's component services programme and Airbus Industries' support package for aircraft repairs were also being affected because of which the incidents of the PIA planes suffering damage were increasing with each passing day.

In a statement, the PIA spokesperson said the main reason behind the airline’s financial crisis was the country's economic situation.

He blamed the negative credit rating of the country for the shortage of foreign exchange.

Read also: FBR freezes PIA accounts over non-payment of FED

The spokesperson requested the government to try to resolve the financial issues of the PIA as soon as possible.

He pointed out that the year 2023 was positive in terms of the PIA’s revenues but the airline’s interest payments had kept it under immense pressure.

The spokesperson continued that the PIA was facing a shortage of dollars in making its interest payments.

In Islamabad, the interim prime minister, while chairing a meeting to discuss the affairs of the PIA, ordered its management to present the airline’s detailed restructuring plan to the ECC at the earliest.

He was informed that the recent amendment to the PIA Act, 2016 had paved the way for the national flag carrier’s restructuring.

The acting premier directed its management to take steps to further improve the airline’s connection to remote areas with other cities of the country.

He added that the PIA’s flight timings should be scheduled according to the convenience of the passengers.

PM Kakar recalled that at one time, the PIA was considered one of the best airlines in the world.

He continued that the PIA was an important national institution, which had provided splendid air services in the past and earned a positive image across the world.

The interim PM directed the Aviation Division and the PIA management to work day and night to regain the past glory of the airline.

Caretaker Finance Minister Dr Shamshad Akhtar, advisers to the interim PM Air Marshal (retd) Farhat Hussain and Ahad Cheema as well as other officials attended the meeting.

In a development related to the PIA, the employees of the airline ended their 26-day-long strike after the national flag carrier’s administration issued a mail, giving approval to a 20% increase in the salaries of group 1 to 4 workers.

A memorandum of understanding was signed in this connection as well.

According to the PIA People's Unity CBA Union president Hidayatullah Khan, the “salary increase movement” of the employees had come to fruition.

(With input from our correspondent in Karachi)