The national carrier had been posting operational profits for the last five years. Currently, PIA has 38 aircraft out of which 25 planes are in service. PHOTO: FILE
The Economic Coordination Committee of the cabinet, in its meeting on Tuesday, accorded in principle approval for the acquisition of newer narrow body aircraft on dry lease to Pakistan International Airlines (PIA), which will improve the national carrier’s schedule reliability along with cutting back fuel costs, a spokesperson for the company said.
According to a press statement, the cabinet committee approved a special bailout package of Rs100.5 billion and a provisional business plan for the cash-strapped national carrier.
The ECC also approved extension in all sovereign guarantees extended to PIA along with approval of the airline’s request to provide support for additional funding to provide the carrier some fiscal space.
PIA is looking at buying around eight Airbus A320 aircraft on dry lease. The financing details have not yet been finalised. “We will probably get the delivery in the middle of April,” said an airline official.
A dry lease is a leasing arrangement whereby an aircraft financing entity provides an aircraft without insurance, crew, ground staff, supporting equipment, maintenance, etc.
The bailout covers fresh guarantees of Rs49 billion in 2013 to meet critical liquidity needs of the corporation, $46 million (Rs4.5 billion) for acquiring narrow body aircraft to replace ageing fleet, loan guarantees of Rs33.5 billion until June this year and borrowing of Rs13.5 billion from National Bank against a letter of comfort to be subsequently replaced by guarantees.
PIA was recovering from its ailing health. The national carrier had been posting operational profits for the last five years. Currently, PIA has 38 aircraft out of which 25 planes are in service. PIA had recorded cumulative losses of Rs141 billion from 2002 to 2012.
The ECC meeting was chaired by newly appointed Federal Minister for Finance and Economic Affairs Saleem Mandviwalla, whereas Minister of Defence Syed Naveed Qamar, Secretary Defence and PIA Chairman Lieutenant General (retd) Asif Yaseen Malik, PIA MD Muhammad Junaid Yunus and airline’s CFO Aftab Ahmed were also present.
The national carrier presented an interim business plan for the period 2014-18 to steer the airline into profitability. The ECC desired that a mechanism should also be placed to monitor the progress and operations of the airline.
Mandviwalla advised that the finance ministry will carry out the monitoring on behalf of the government, the spokesperson added.
Additional reporting by Saad Hassan and Raheel Ahmed
Published in The Express Tribune, February 27th, 2013.
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COMMENTS (10)
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@Nadir: You can buy and lease the aircraft to someone else.
This seems like just a quick fix and buying 8 aircraft on dry lease just seems ludicrous. You fundamentally need aircraft support unless it is sourced elsewhere for a lesser fee.
Why not, the PIA has more than 50% aircraft's already grounded because of various technical faults. Clearly we cannot maintain or fix our own aircraft's. As we are the richest country in the world with no problems at all. Why not buy expensive aircraft's just for the sake of it?
Seems the new FM is in "rush"
@Dhaka, you mean to say PIA leases Biman airlines which is an airlines that PIA helped and donated their aircrafts long ago in order to make them an airline they were
Why can't PIA lease our airlines Biman instead of purchasing new one???
They should have daily flight to the UK and europe from all three stations KHI LHE ISL....WE NEED A FLEET over haul not new aircraft....flying 777 Intercity in Pakistan what Stupidity is this is this.
Thats like treating cancer with aspiring. The symptoms are alleviated but not the disease.
This is like using aspirin to treat cancer. You can alleviate some symptoms but eventually the patient will die. It just delays the inevitable but at great cost to the nation. However, the commissions in buying/leasing new aircraft would benefit generations of the decision makers family.
You can either buy or lease, you cant buy to lease!