These comments were made subsequent to a new PIA request for additional guarantees of Rs 15.5 billion to keep the airline afloat. The national flag carrier which is now headed by Air-Vice Marshal, Arshad Malik is facing liquidity issues even for its day-to-day operations. According to the Finance Ministry, during financial year 2018-19, the ECC approved GoP guarantee amounting to over Rs 24 billion exclusively for engine overhaul requirements, however, with its utilization, any visible improvement in PIA's commercial operations is yet to be seen.
The Finance Ministry further stated that current level of GoP guarantee other than engine overhaul stood at Rs 187 billion, suggesting that PIA should look inward instead of easy access to borrowing. Finance Division is also servicing PIA's debt with budgetary allocation of Rs 18 billion for the current financial year.
Chief Executive Officer, PIACL gave a presentation to the Prime Minister on January 1, 2019 wherein the airlines current state of affairs and way forward were presented, highlighting the key aspects for the sustainable operations which are dependent upon efficient operations supported by timely cash flow management requiring GoP support.
As short-term measures, key steps approved were execution of smooth Hajj operation, recovery of grounded aircrafts, recovery and acquisition of ground support equipment, restoration of in-flight entertainment system, and payment to be made to the long outstanding dues of vendors for supplies and services.
The Civil Aviation Division argues that route rationalisation initiatives are being undertaken by PIACL however grounded aircraft are limiting its capabilities. The airline is striving to operationalise the grounded aircrafts on urgent basis. For recovery of grounded aircrafts, an additional guarantee to the extent of Rs 5.6 billion is required for the maintenance of engines and acquisition of related spare parts.
Secretary Aviation Division, in his proposal further stated that PIACL is also faced with the challenge of accumulated liabilities, whereas on the one hand default notices are being served by aircraft lessor, while on the other pressure is being exerted by the vendors/ service providers like General Authority of Civil Aviation (GACA, Saudi Ground Services (SGS) and international fuel suppliers regarding suspension of service. Owing to cash flow crises, it is difficult to run day to day operations hence, an additional guarantee of Rs 8.4 billion has been sought for payment to vendors/suppliers, and repair/acquisition of ground support equipment.
The sources said, PIAC also intends to improve the passenger travel experience for which it intends to repair In-flight Entertainment System (IFE) for which cash grant to the tune of Rs 485 million has been sought.
The Civil Aviation Division points out that during the meeting of the ECC held on November 12, 2018, Finance Minister, as Chairman ECC, besides approving the original summary also directed/authorised Finance Ministry to automatically adjust the level of GoP guarantees related to USD. However, the minutes issued did not reflect this decision. The Civil Aviation Division has requested that guarantee level adjustment decision owing to USD volatility be ratified so that it could be implemented in letter and spirit.
