New business plan: Govt approves $4.5 million bailout for PIA

Loans worth Rs8 billion to be converted into equity, reschedule Rs147 billion worth of loans.

ISLAMABAD: The government on Wednesday went all in with a fresh bailout for the teetering national flag carrier as Prime Minister Raja Pervez Ashraf instructed the Finance ministry to release $4.5 million to Pakistan International Airlines Corporation (PIAC) on priority for leasing new aircraft, after fulfilling necessary formalities.

The Prime Minister while chairing a meeting to review the performance of the airline stuck in a four year long downward spiral, assured its management that he would favourably consider conversion of Rs8 billion loan by the federal government into equity.

The Prime Minister directed the Ministry of Finance to work out a plan for rescheduling of loans of Rs147 billion owed to different banks by PAIC, proving the company had been deemed by the government as ‘too big to fail.’

He lauded the business plan worked out by PIAC and observed that he saw a ray of hope for PIAC's turnaround and improvement in its services and assured that the government will extend all possible assistance to the PIAC management to regain its status worthy of a national carrier.

Ashraf hoped that the PIAC management under its new leadership would bring about marked changes in the organisation in the shortest possible time, so that the people could feel the difference.

The Prime Minister appreciated the last ditch effort of PIAC to carry Hajis from Iraq, Myanmar, Sri Lanka and Bangladesh, enabling them to perform Hajj. However, he was careful to point out that these operations should in no way create any cause of complaints for Hajjis travelling from Pakistan.

New management, new business plan

Chairman PIAC Air Chief Marshal (Retd) Rao Qamar Suleman, who took over PIAC earlier this year, presented his business plan worked out by the new management in line with directions and policy guidelines given by the President and the Prime Minister of Pakistan.

On the current financial and operational problems faced by PIAC, the former air chief said that fuel cost and cost of financing were eating away a substantial part of the annual revenue of Rs117 billion.

He proposed short term, medium term and long term measures to resolve the problems being faced by PIAC. The Chairman said the business plan had been prepared with a view to rationalise expenditure on one hand while endeavouring to optimise revenues on the other. He requested the Prime Minister to convert the federal loan of Rs8 billion loan into equity and allow roll over of Rs147 billion loans due to various banks. He also requested for an immediate assistance of $4.5 million for acquiring aircraft on dry lease.

The meeting was attended by Minister for Defence Syed Naveed Qamar, Minister for Finance Dr Abdul Hafeez Sheikh, Deputy Chairman Planning Commission Nadeemul Haq, secretaries of Cabinet, Defence, Finance ministries and senior government officials.