The Ministry of Finance is likely to release Rs14 billion for the ailing national flag carrier, the Pakistan International Airlines (PIA), which had requested an amount of Rs22.88 billion in order to carry on its financial operations.
According to sources in the ministry, the payment of Rs260 billion loans that the PIA owes to different entities is also likely to be deferred. The federal government is the guarantor of these loans.
The Federal Board of Revenue (FBR) had frozen the accounts of the PIA due to non-payment of federal excise duty. This action resulted in a shortage of funds for the PIA.
As a result, the operation of both domestic and some international flights was affected and the airline could not pay salaries to its employees. The FBR had subsequently unfrozen all the bank accounts.
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The PIA spokesperson recently confirmed to an international publication that the flag carrier had grounded 14 out of its fleet of 31 aircraft as it faced a severe financial crunch and mounting debt.
The last PML-N led coalition government on August 7 announced its plans to privatize the national airline, which has accumulated hundreds of billions of rupees in arrears and losses over the years.
Successive Pakistani governments have been doling out billions of rupees from their budgets to keep the loss-making public entity afloat.
Last week, Caretaker Prime Minister Anwaarul Haq Kakar had called for finalizing a restructuring plan for the PIA, underscoring the urgency of securing its long-term survival. The move came on the heels of the government’s rejection of PIA’s appeal for a whopping Rs22.88 billion ($76 million) bailout package.