Tag: Boeing

  • PIA faces flight cancellations and delays as financial crisis intensifies

    PIA faces flight cancellations and delays as financial crisis intensifies

    Pakistan International Airlines (PIA), currently grappling with severe financial challenges, has been compelled to cancel multiple domestic and international flights.

    An authoritative representative of the national flag carrier conveyed to Geo News that there’s a looming risk of suspending flight operations by September 15, today, unless urgent financial support is extended.

    This predicament initially materialised on August 12, when numerous domestic flights, both departing from and arriving in Karachi, had to be abruptly canceled. This unfortunate situation was attributed to a combination of financial constraints and the inability to settle outstanding dues owed to Pakistan State Oil (PSO) for fuel supply.

    An examination of today’s schedule at Jinnah International Airport reveals a series of disruptions in PIA’s services. Notably, flights from Karachi to Bahawalpur (PK588 and PK589) and Karachi to Lahore (PK302 and PK303) have been canceled.

    Furthermore, the Karachi to Islamabad flight (PK368) faces a three-hour delay, while the Karachi to Lahore flight (PK304) encounters an extensive delay of eight and a half hours.

    Additional disruptions include the cancellation of PIA flights between Karachi and Rahim Yar Khan (PK582 and PK583), along with delays for Karachi to Multan (PK330) and Dubai (PK213), both postponed by two hours.

    Moreover, the Islamabad to Karachi flight (PK301) has been cancelled; Islamabad to Riyadh (PK753) is running three hours behind schedule; and Lahore to Karachi (PK305) faces a delay of two and a half hours.

    PIA’s financial struggles have been escalating, with the airline revealing on September 7 that it had grounded five of its 13 leased aircraft, potentially grounding an additional four due to the ongoing financial strain. 

    A plea for an urgent bailout of Rs22.9 billion was met with rejection by the Economic Coordination Committee (ECC). The ECC also declined the request to defer payments, including Rs1.3 billion per month to the Federal Board of Revenue (FBR) for Federal Excise Duty (FED) and Rs0.7 billion per month to the Civil Aviation Authority (CAA) for embarking charges.

    Adding to the airline’s woes, PIA cautioned of possible suspensions in the supply of spare parts by Boeing and Airbus come mid-September. In the previous month, the Federal Board of Revenue of Pakistan (FBR) took the drastic step of freezing 13 PIA bank accounts due to non-payment of Rs8 billion in FED.

  • Financial turmoil threatens PIA: Flight cancellations surge, salaries delayed

    Financial turmoil threatens PIA: Flight cancellations surge, salaries delayed

    The Pakistan International Airline (PIA) faces an imminent crisis, as a high-ranking official from the national carrier has issued a warning that flight operations may be suspended by September 15th if emergency funding is not promptly secured. This concerning development, as reported by Geo News, underscores the severity of the situation.

    In a statement to Geo News on Wednesday, a senior director at PIA highlighted that the operational fleet has dwindled from 23 to just 16 aircraft, resulting in the unfortunate cancellation of numerous flights. The dire financial straits of the airline have led to significant disruptions.

    Furthermore, the official revealed that renowned aircraft manufacturers, Boeing and Airbus, have halted the supply of crucial spare parts to PIA due to outstanding payments. This disruption, coupled with reduced flight operations, has incurred substantial daily losses running into millions of rupees for the national airline.

    In a distressing incident, one PIA aircraft was temporarily detained at Dammam airport, while four others faced a similar situation at Dubai airport, all due to unpaid fuel bills. These aircraft were eventually permitted to depart based on written assurances from PIA, with the International Air Transport Association (IATA) reinstating PIA services following an emergency payment of $3.5 million.

    The official’s somber warning emphasized that without an injection of Rs23 billion in emergency funds, flight operations may face suspension by September 15th.

    In response to this critical situation, a PIA spokesperson, in a statement, assured that exhaustive efforts were underway to avert the suspension of flight operations.

    Earlier reports had indicated that PIA’s financial challenges had severely impacted its flight schedule, resulting in the cancellation of both domestic and international flights. The airline had urgently requested government intervention to provide the necessary funds, and there were also reports of unpaid salaries to PIA employees.

    This financial turmoil for PIA had previously prompted the grounding of five leased aircraft, with the possibility of grounding four more due to ongoing financial constraints. The airline had sought an emergency bailout of Rs22.9 billion, which was unfortunately rejected by the Economic Coordination Committee (ECC). Additionally, the ECC declined requests for the deferment of monthly payments to the Federal Board of Revenue (FBR) and the Civil Aviation Authority (CAA).

    In another setback, last month, the FBR had frozen 13 PIA bank accounts due to non-payment of Rs8 billion in Federal Excise Duty (FED), further compounding the airline’s financial woes.

  • From ‘great people to fly with’ to ‘great debt to deal with’: PIA expected to ground several aircraft

    From ‘great people to fly with’ to ‘great debt to deal with’: PIA expected to ground several aircraft

    Pakistan International Airlines (PIA) is facing a critical financial crisis, prompting the grounding of several aircraft due to difficulties in securing funds. This crisis has resulted in arrears with various stakeholders, including creditors, aircraft lessors, fuel suppliers, insurers, and airport operators. Boeing and Airbus are also on the verge of discontinuing spare parts supply by mid-September.

    The Ministry of Aviation has urgently requested a cash injection of Rs23 billion and the suspension of duties, taxes, and service charges, although no concrete business plan has been presented. The restructuring of PIA is expected to be a complex eight-month process, and the airline must remain operational during this period for divestment to yield a fair value.

    Regrettably, PIA serves only a small fraction of Pakistan’s population while consuming significant public funds. The government, holding a 92 per cent share in PIA, faces mounting losses attributed to competition, mismanagement, and inadequate funding for fleet expansion.

    As of December 31, 2022, PIA’s debt and liabilities stood at Rs743 billion, five times more than its assets’ total value. The airline’s annual losses reached Rs86.5 billion for the last financial year, with projections indicating debt and losses could further rise.

    According to Dawn, previous attempts to make PIA sustainable through cost-cutting and fleet expansion have failed. Alternately, efforts focused on financial, legal, and operational restructuring to attract private investment have been explored but not implemented.

    In June 2023, a decision was made to restructure PIA based on the Dubai Islamic Bank Consortium Report. This involves creating a new holding company to retain legacy loans and non-aviation assets while keeping PIACL subsidiaries intact. Recent legal restrictions hindering private investment have been lifted.

    However, the restructuring plan is pending government approval. The Aviation Division has requested Rs23 billion in funds and relief from various financial obligations. A separate panel has been formed to assess the restructuring plan, with support from the finance ministry and the State Bank of Pakistan expected once the plan is fully finalised.