Pakistan International Airlines has requested additional funds worth $157.1 million from Pakistani government for payment of interests and covering operational costs. The break-up of the amount stands as follows - $76.8 million to meet interests on existing loans, $54.5 million for sovereign guarantees to facilitate more loans as the existing guarantee of $870 million is already exhausted and $24.4 million to acquire new aircraft.
As per local media reports, the request was made to the Finance Minister of Pakistan Ishaq Dar on April 6. The minister has asked the airline management to present a business plan before any further funding.
The Pakistani government was covering the airline’s interest on existing loans for five years on the basis that the airline should be financially stable in five years from 2017. The agreement to cover interest payments expires on June 30, 2023.
Accordingly, the government continues to pay the airline’s interests. However, PIA suffered a loss of $2.21bn in the five years from 2017 to 2022.
In 2022, the government allocated $52million to cover PIA’s interest payment, even though the interest was $110 million. Now with the rise in interest rates the airline has an interest outstanding of $130 million.
The airline also owes money to the Pakistan state oil company, utility provider K-Electric, the Federal Board of Revenue, as well as insurers, aircraft, engine lessors and is seeking tax and duties exemptions for import of spares.
Meanwhile, the Federal Board of Revenue (FBR) in Pakistan recently seized $4.5 million from PIA's bank accounts leaving the airline financially vulnerable to make salary payments to its employees. PIA owns $10.4 million to FBR, the agency has given a timeline of one week to the airline to pay the balance $5.9 million.
Due to non-payment of salaries, pilots, cabin crew and other working staff of the airline are planning to go on a mass strike during the Eid holiday season in Pakistan.