In order to pay interest expenses and fund operations, Pakistan International Airlines (PIA) is requesting an additional Rs. 45 billion bailout package from the government.
Ishaq Dar, the finance minister, heard the demands on Thursday but did not immediately promise to provide any more financial assistance. Dar, according to the Express Tribune, requested that management instead create a workable business plan.
According to reports, the PIA has asked for a Rs. 22 billion government injection to cover interest on its loans, Rs. 15.6 billion in extra sovereign guarantees to take out more loans, and yet another Rs. 7 billion to buy a plane.
The five-year government facility to choose the interest rate, which ends on June 30, has also been requested to be continued until the airline’s balance sheet is reorganised by the Ministry of Aviation.
Since 2017, there have been at least three PIA restructuring operations, but the national flag carrier has been making significant losses due to the lack of a workable business plan. In December 2017, the then-government decided on PIA’s interest rate for five years, subject to the airline achieving financial viability. On the other hand, the PIA administration asked yesterday to extend the interest-payment facility until the financial restructuring is finished.
In the current fiscal year, the government allocated Rs. 15 billion for interest payments. But PIA has asked for an extra Rs. 22 billion.
Despite an annual requirement of close to Rs. 32 billion, it was reported in a meeting that the finance ministry had only budgeted Rs. 15 billion. The airline claims that due to an increase in interest rates, the overall cost of debt servicing for this fiscal year will rise to Rs. 37 billion.
Currently, PIA owes a significant amount to the Federal Board of Revenue, K-Electric, the Pakistan State Oil Company, as well as expenses for fleet insurance and aircraft and engine lessors.