Boeing, Airbus ‘likely to suspend’ spare parts supply to PIA amid liquidity crunch

• PIA grounds 5 out of 13 leased aircraft due to cash-flow crisis.
• PIA says keeping airline operational necessary for privitisation.
• ECC rejects PIA summary seeking emergency bailout.

The Pakistan International Airlines (PIA) has warned that Boeing and Airbus are likely to suspend the supply of spare parts by mid-September as the national flag carrier faces “serious cash flow problems”.

In a summary sent to the Economic Coordination Committee (ECC) for an emergency bailout, PIA said it was unable to pay its creditors, aircraft lessor, fuel suppliers, airport operators, International Air Transport Association (IATA), and others due to a liquidity crunch.

The national flag carrier further said it was forced to ground five out of 13 leased aircraft, while four additional aircraft are likely to be grounded this week due to the prevailing crisis.

In the summary, PIA also highlighted that keeping the state-run airline operating is necessary to determine the fair price of its shares for privatisation.

Meanwhile, the ECC meeting on Wednesday rejected the PIA demand for the provision of Rs22.9 billion and deferment of Rs1.3 billion per month to the Federal Bureau of Revenue (FBR) as well as loans and markup amount till the finalisation of the restructuring plan.

During the meeting, the Ministry of Aviation submitted a summary on “Financial support for PIACL & its Restructuring”.

The secretary of Aviation gave a detailed briefing to the chair about the financial burdens, liabilities of PIA, and the need for restructuring the organisation.

The ECC discussed and reviewed the timelines and costs of the restructuring plan. After detailed discussion and deliberation, it was decided to constitute a separate committee for the assessment of PIA’s restructuring plan.

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.

It was also decided that the Finance Division and State Bank of Pakistan would support PIA in tackling its financial challenges after a concrete plan for restructuring the airlines had been finalised and submitted to the satisfaction of the committee.