The debt-ridden Pakistan International Airlines could not fly out of its financial crunch as the national flag carrier has decided to partially ground its domestic and international flight operation, reported 24NewsHD TV channel on Friday.
Once vibrant and growing PIA has now stuck into a steep financial debt amounting to billions of rupees that the airlines is even unable to pay salaries to its employees and purchase fuel for its aircraft.
The financial crunch has forced the PIA to resort to its Plan B according to which, the airlines will partially bring to halt its domestic and international flight operation.
Sources said that the national flag carrier was banking on the interim government but the government could not bail it out, leaving it in the lurch.
According to Plan B, the PIA will limit its flight operation by 15% to 25%. The airlines will reduce its operation on less earning or unimportant routes.
Sources said that the national flag carrier will limit its domestic flight operation in the first phase while in the second leg of its operation, the PIA will reduce its international flights.
The domestic routes where PIA flights will be reduced include: Islamabad, Lahore, Karachi, Gilgit and Skardu.
In the second phase, the PIA will cut flights on international routes including UAE, Kuwait, Saudi Arabia and many other Gulf countries.
The debt-ridden national flag carrier has grounded 16 of its aircraft so far.
The airlines has paid August salaries only to its lower staff while officers and flight crew have yet to be paid.
Sources said that the PIA needs Rs1.40 billion to pay salaries to its employees every month.
According to an AFP report, the national flag carrier admitted Friday it was struggling to pay bills and wages after reports said the fleet may be grounded within days.
Abdullah Hafeez, spokesman for PIA, said the company was seeking urgent financial help from the treasury, but had secured funds "for the time being".
"But we do struggle due to balance sheet challenges," he said. "That is why PIA is seeking balance sheet restructuring support from the owners."
Decades of mismanagement and instability have hobbled Pakistan's economy, and this year Islamabad was forced into a deal with the International Monetary Fund (IMF) to avert default.
State-run enterprises in particular -- long accused of being bloated and poorly run -- have found funds drying up as the government struggles with a balance of payments crisis caused by crippling debt repayments.
Hafeez said three flights were grounded Thursday and that salaries had been paid late.
Twenty-five aircraft from a fleet of 31 were still flying, with the others grounded for scheduled or unscheduled maintenance, he said.
Local media reports this week said that the airline was on the verge of collapse and flight operations could be suspended in days if emergency funds were not provided.
Bloomberg reported that PIA had liabilities of 743 billion rupees (around $2.5 billion), exceeding its total assets by five times.
PIA came into being in 1955 when the government nationalised a loss-making commercial airline, and enjoyed rapid growth until the 1990s.
The liberalisation of the market and launch of several private and publicly-owned airlines put enormous pressure on PIA, resulting in years of lossmaking.
The airline's reputation was also battered by a series of strikes, hijackings and accidents -- including the crash of an Airbus in Karachi in May 2020 that killed 97 passengers and crew.
The government has plans to sell part or all the airline, but has so far not acted on a least two proposals put forward for privatisation by special committees.
Govt expedites steps to sell PIA’s hotel in USA
The government has expedited steps to sell Pakistan International Airlines’ Roosevelt Hotel in Manhattan, USA.
The privatization commission has invited applications for financial advisers.
The commission has instructed the interested firms to submit applications by October 9 with a request of $1,000 fees to be submitted along with the application.
Technical documents for applying as financial advisor for the Roosevelt Hotel could be downloaded from the website of the privatization commission.
The PIA's Roosevelt Hotel has been included in the list of public enterprises that the government wants to privatize.
Reporter Tayyab Saif