Islamabad: Pakistan International Airlines could be slated to receive another bailout to the tune of Rs10b, as the government considers increasing its sovereign guarantees to R172b.
PIA has been beset my massive financial losses and the current governments effort to turn it around, have failed. The state-owned airline has approached the government for a Rs10b lifeline to pay off its debts on back of sovereign guarantees.
Aviation division has sent a summary to Ministry of Finance requesting approval for increase in borrowing limit of PIA because of its worsening financial position.
This bailout will be subject to a go-ahead by Economic Coordination Committee (ECC) which is chaired by the PM Shahid Khaqan Abbasi and the finance ministry is completing the procedural requirements to get this bailout approved.
If this bailout gets the nod, it will be the fourth time in the last year that PIA has been granted an increase in sovereign guarantees to make it eligible to obtain more loans and meet its expenditures. In January this year, the government had increased the ceiling cap of sovereign guarantees from Rs151b to Rs161b.
Given the bailout is approved, it is expected that PIA will obtain loans worth Rs7b on back of these sovereign guarantees to pay interests on earlier borrowings.
Since PIA had been converted into a limited company, its financial results for financial year 2016 couldn’t’ be prepared said the company spokesman Mashood Tajwar on Tuesday.
As per the entity’s financial statements up to September 2016, it had amassed total liabilities of Rs349b in comparison to Rs113.8b assets. PIA’s losses are accumulating and rising on a daily basis.
Federal Audit report had revealed that for the years 2014 and 2015, PIA suffered losses of Rs1.3b in the Karachi-Lahore and Lahore-Karachi route due to poor planning.
