The cash-strapped Pakistan International Airlines (PIA) is reportedly on the verge of a shutdown as it cancelled more than 500 flights were cancelled in the last 11 days due to unavailability of fuel, according to a spokesperson of the country's national carrier.
According to ARY News, the Pakistani airline is facing its worst crisis in history after the Pakistan State Oil (PSO) cut off its fuel supply over non-payment of dues, forcing it to cancel at least 537 flights since October 13.
On Thursday, as many as 49 domestic and international flights were cancelled from Karachi, Lahore, Islamabad, Quetta, Multan, Peshawar and other cities due to unavailability of fuel, sources said. The PIA Chief Executive Officer (CEO) Amir Hayat has written a ‘motivation letter’ to the employees ahead of the privatisation.
Hayat asked all employees of the Pakistani national carrier to maintain focus on ensuring organizational compliance through closely-knit teamwork ahead of the airline’s privatisation.
Meanwhile, more aircraft have been grounded as the airline struggles to secure funds to maintain its operations. At least four Boeing 777 plans have been grounded due to lack of funds, sources informed.
PIA gets nod for loan
However, in a much-needed relief, the cash-strapped airline might receive a fresh loan of Rs 20 billion from commercial banks after a nod by the caretaker regime in Pakistan, sources added.
According to the sources, the finance ministry has ‘directed’ commercial banks to release fresh loans to Pakistan International Airlines, while the current govt’s debt is also to be ‘rescheduled’ for six months, potentially providing a small relief to the crisis-hit airline.
It is worth mentioning that the PIA has already taken a loan of Rs 260 billion from commercial banks, which it is now struggling to pay back.
The Pakistani national carrier is going through desperate financial woes after the Federal Bureau of Revenue (FBR) froze all of its bank accounts due to non-payment of taxes in July, after which it was unable to clear its its dues owed to the PSO.
The PIA sought an emergency bailout of Rs 22.9 billion in September that was rejected by Pakistan's Economic Coordination Committee (ECC). The ECC also declined a request for deferment of the payments of Rs 1.3 billion per month, which PIA pays to FBR against Federal excise duty (FED), and Rs 0.7 billion per month paid to the Civil Aviation Authority (CAA) against embarking charges.
The PIA's problems worsened when its flight was briefly stopped in Canada on complaints regarding ground handling and fuel company complaints. The plane was released after dues worth $200,000 was cleared.
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