By Caretaker Prime Minister Anwaar-ul-Haq Kakar has issued a directive to accelerate the privatization process of Pakistan International Airlines (PIA) on an urgent basis. This decision comes as the national flag carrier of Pakistan faces a severe financial crisis that has compelled it to reduce its flight operations.
The previous government, under former Prime Minister Shehbaz Sharif, announced its intention to privatize PIA on August 7. This move followed Pakistan’s agreement to adhere to fiscal discipline measures outlined by the International Monetary Fund (IMF) in exchange for a $3 billion bailout program in June. PIA, a state-owned enterprise burdened with significant debt and arrears accumulated over the years, has required financial assistance from successive Pakistani governments to stay operational. The current administration, led by PM Kakar, rejected PIA’s request for a bailout package worth Rs23 billion ($76 million) to alleviate its financial woes.
This development occurs amidst reports suggesting that PIA’s flight operations may be suspended by September 15 if emergency funds are not provided. A senior PIA official revealed that the airline had reduced its operational planes from 23 to 16, resulting in the cancellation of several flights. Additionally, Boeing and Airbus, the aircraft manufacturers, had suspended spare parts supplies to PIA due to non-payment, causing significant daily losses.
The official further disclosed instances of PIA aircraft being detained at Dammam and Dubai airports for failure to settle fuel bills. The official warned that flight operations might come to a halt unless Rs23 billion in emergency funds were secured.
During a meeting concerning PIA-related matters, the interim prime minister instructed caretaker Minister for Privatisation Fawad Hasan Fawad to oversee and expedite the privatization process. The prime minister emphasized the urgent need to provide reliable services to passengers and elevate PIA’s standards to meet global airline benchmarks. He urged all relevant stakeholders to find immediate solutions to the privatization issues.
In the meeting, the prime minister was briefed on the progress of PIA’s privatization process. PIA had requested an emergency bailout of Rs22.9 billion, which was rejected by the Economic Coordination Committee (ECC). The ECC also turned down PIA’s request for the deferment of monthly payments, including Rs1.3 billion to the Federal Board of Revenue (FBR) for Federal Excise Duty (FED) and Rs0.7 billion to the Civil Aviation Authority (CAA) for embarking charges. The airline had additionally cautioned that Boeing and Airbus might halt the supply of spare parts by mid-September.
Last month, the FBR froze 13 PIA bank accounts due to non-payment of Rs8 billion in FED.
