Cash-strapped Pakistan International Airlines (PIA) has received another lease of life with a supplementary grant of $14 million from the Pakistan government. With this grant the airline aims to pay off the interest on legacy loans and overcome cash-flow issues.
Mohammad Ishaq Dar, the Federal Minister for Finance and Revenue made the announcement during the Economic Coordination Committee (ECC) of the Pakistan Cabinet.
Prior to this, the government had already allocated $52.5 million of loans to PIA in 2022-23 budget. The airline had requested an addition loan of $157.1 million which was rejected by the ECC. Later the ECC approved $66.7 million and instructed the airline to arrange remaining funds from banks.
PIA continues to face liquidity problems resulting in increased borrowings pushing finance costs up by 72% in interest rate, as per its Q1 report ending March 31, 2023. The devaluation of Pakistani rupees further added to the airline’s woes leading to increased loss before tax to rise to $81.9 million in Q1 of 2023.
Further in May 29, AerCap impounded one of PIA’s B777-200ER in Malaysia over lease payment dispute while Willis Lease has initiated a lawsuit against the airline in US Court over unpaid engine leases.