Pakistan International Airlines (PIA) announced on Monday that an extension of credit by Pakistan State Oil (PSO) would enable the national carrier to expand its flight operations.
Facing a dire financial situation, the state-owned oil company provided a relief of Rs500 million to the airline last week, following the cancellation of hundreds of flights that led to a drastic 70% reduction in PIA’s daily revenue.
“The PIA’s disrupted operations are on the path to recovery with improved fuel supply,” the airline stated optimistically.
Assuring a return to normal flight schedules in the coming days, PIA highlighted the ongoing progress in fuel supply enhancements.
Prior to the credit extension, PIA had been remitting Rs100 million daily to PSO for fuel procurement, leading to an outstanding debt of Rs26.8 billion ($97.37 million) owed to the state-owned oil company.
In a recent meeting held on October 16, high-ranking officials from both entities convened to strategize future actions.
Financial Troubles for PIA PIA has encountered significant financial setbacks due to disruptions in flight operations, resulting in the cancellation of over 600 flights in the recent past.
The airline’s daily revenue plummeted from Rs700-800 million to Rs300 million.
Simultaneously, the interim government is actively seeking Rs8 billion in loan guarantees to adhere to the prescribed limits by the International Monetary Fund (IMF).
Notably, the Economic Coordination Committee (ECC) greenlit bridge financing of Rs8 billion through CAA resources to settle liabilities amounting to $25 million owed to Malaysia for the procurement of two aircraft. Despite an initial outstanding balance of $30 million, PIA managed to negotiate payment of $25 million.
Earlier, the airline had requested Rs24.6 billion from the Government of Pakistan for operational expenses. The Ministry of Finance initially declined the request, citing previous instances where financial injections were made with an agreement for a restructuring plan that was not implemented.
