Pakistan government announces privatisation plan for PIA amid fuel crisis and flight disruptions
The government of Pakistan is ready to privatise its troubled flagship airline, PIA, after years of financial losses and flight disruptions.
The government of Pakistan is ready to privatise its troubled flagship airline, PIA, after years of financial losses and flight disruptions.
Pakistan International Airlines (PIA) is facing a severe financial crisis that has been affecting its operations and services for years. The government, which owns the majority stake in the airline, has been struggling to keep it afloat with regular injections of funds, amounting to billions of Pakistani rupees. However, the government has recently announced its intention to privatise the airline and sell its shares to private investors.
The financial woes of PIA have resulted in frequent disruptions in its flight schedule, causing inconvenience and frustration for its customers and passengers. According to sources within PIA, the airline has failed to pay its dues to Pakistan State Oil (PSO) for fuel supply, leading to flight cancellations and delays. At least five domestic flights were cancelled due to lack of available aircraft, while other flights faced delays of up to two hours. The flights affected were those connecting major cities of the country.
The financial crisis of PIA has led to a shortage of funds to pay for fuel from PSO, resulting in many flights being grounded. The Federal Ministry for Finance has decided to stop subsidizing the loss-making airline and to privatize it, asking for a privatization plan from both the Privatization Division and the PIA management.
"PIA is facing a severe cash crunch and huge losses, which amount to over Rs 420 million per day due to aircraft grounding. The government has been supporting it for years, but now it seems hopeless," said economist Irshad Ansaari.
However, PIA spokesperson claims that some financial relief has been provided to the airline, enabling it to resume some of its flights. "The on-time departure ratio is expected to increase to 72 per cent now," said PIA spokesperson.
A PIA source said that the flight operations are gradually returning to normal, as 72 flights (18 domestic and 54 international flights) were scheduled to depart from various airports in Pakistan on Sunday.
The interim-Finance Minister, Shamshad Akhtar, has disclosed that the national flag carrier is facing staggering losses of around Rs 12 billion every month. She said that PIA has repeatedly resorted to borrowing Rs 260 billion from commercial banks, which were backed by the government, to keep operating.
A Federal Board of Revenue (FBR) official said that PIA owes about Rs 1.25 billion in taxes, while it pays about Rs 1 billion per month to the civil aviation authority.
Economist Talib Fareedi said that PIA's monthly expenses are about Rs 34 billion, while its monthly revenue is only Rs 22 billion. "This results in a huge deficit, that keeps accumulating with every passing month," he said.
He added that PIA's total deficit currently stands at about Rs.740 billion, a shocking figure that has prompted the finance ministry to devise an urgent privatization plan.
The Cabinet Committee on Privatization (CCOP) of the Pakistan government has already approved the privatization of PIA. The newly appointed privatization minister Fawaz Hasan Fawad has been instructed to expedite the process of privatizing PIA.
A source in the Finance Minister of Pakistan said that the proposed plan aims to quickly implement the privatization of the state-owned entity, because the airline debt size is five times larger than the value of its assets.
