PIA risks grounding 15 planes amid dues worth Rs20 billion

  • Dues pertain to FED, fuel and lease payments.
  • Over 30 national aircraft at risk of suspension.
  • PIA overhauling to take 12 months: aviation ministry.

KARACHI: The Pakistan International Airlines (PIA) is in deep waters as it risks grounding 15 planes amid a significant financial crisis due to growing dues owed by the national carrier.

According to well-placed sources privy to the development, PIA has to clear dues worth up to Rs20 billion. Any delay in timely payment of the dues pertaining to fuel, federal excise duty (FED) and lease payments, might lead to 15 planes being grounded.

More than 30 national flights will be suspended if the planes are grounded, the sources added.

Meanwhile — commenting on the dire situation — the Ministry of Aviation said that overhauling the PIA is a “complicated” process and will take a year. However, during this time it is imperative to keep the national flag carrier operational.

The development comes as last week, the national flag carrier announced the “easing” of its financial challenges following the release of critical funds by the banks as a result of support by the government of Pakistan.

“The funds shall be used to clear long-standing dues of Aircraft and engine leases, spare support and handling payments at foreign stations. Restructuring is also on track,” the national flag carrier said.

PIA’s financial woes

Last week, the PIA grounded five out of its 13 leased aircraft with further prospect of grounding four additional plane due to the prevailing financial crunch.

The PIA had asked for an emergency bailout of Rs22.9 billion which was rejected by the Economic Coordination Committee (ECC).

The ECC also rejected the request for deferment of the payments of Rs1.3 billion per month, which PIA pays to FBR against Federal excise duty (FED), and Rs0.7 billion per month which PIA pays to the Civil Aviation Authority (CAA) against embarking charges.

The national flag carrier had also warned that Boeing and Airbus might suspend the supply of spare parts by mid-September.

Last month the Federal Bureau of Revenue (FBR) froze 13 PIA bank accounts due to non-payment of Rs8 billion in FED.

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