Inside Financial Markets

PIA’s financial woes worsen

Pakistan International Airlines (PIA) is suffering from a Rs 5.64 billion loss per month, documents available withBusiness Recorder said. The national flag carrier earns Rs 7.50 billion monthly but its expenses exceed Rs 13.14 billion a month, showing a difference of Rs 5.64 billion. The PIA spends a major chunk of its earning on debt servicing as it pays Rs 3.37 billion on loan repayment and Rs 1.06 billion as mark-up on the loans.

The fuel expenditures are Rs 2.60 billion while Rs 1.60 billion are disbursed among the employees in the heads of salaries and wages. The charges for aeronautical services are Rs 1.21 billion while the flag carrier spends Rs 3.30 billion on miscellaneous expenses. The government last month allowed another bailout package for the PIA as the Economic Co-ordination Committee (ECC) of the Cabinet approved a request for increasing the government’s guarantee limit for the PIA by Rs 10.5 billion to Rs 161.5bn to address its immediate challenges. It also constituted a committee headed by Minister for Planning and Development Ahsan Iqbal to prepare yet another business plan to improve the airline.

The PIA sought another Rs 25 billion to finance or roll over various loans guaranteed by the government before June 30 this year. For this all to achieve, the PIA management sought support of the government to increase its guarantee limit to Rs 161.5 billion from Rs 151 billion. It may be mentioned here that Civil Aviation Authority (CAA) is suffering a loss of Rs 1.1 billion per month due to non-payment of dues by PIA.

The CAA dues payable by PIA increased to Rs 49.162 billion by June 2016 from Rs 37.933 billion in 2015. According to the year-on-year loss faced by the PIA, the losses were Rs 11.965 billion in 2012, Rs 44.71 billion in 2013, Rs 29.31 billion in 2014, while it faced a loss of Rs 29.95 billion in 2015.

The PIA officials confirmed that negotiations are under way and the government has set up a committee to look into the matter. The officials further stated that PIA is facing a financial crisis and running its operations at a loss at the moment and this is not an appropriate time to demand payment of dues from PIA. The PIA has cost national kitty over Rs 100 billion loss during the present tenure of the PML-N government Likewise, the national flag carrier faced a loss of Rs 210 billion during the last decade, which has increased to Rs 270 billion. At present, the airline owes Rs 300 billion to CAA, PSO and others.

Baqar Hussain

A Wannabe CFO, just had stepped in the corporate sector, willing to explore every aspect here and learn as mush as i can, awareness for those who dont, get the info where ever possible and stay up to date always.

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