ISLAMABAD: The government provided Rs5.6bn guarantee to revive two grounded aircraft of Pakistan International Airlines.
The decision was taken at a meeting of the Economic Coordination Committee of the cabinet presided over Finance Minister Asad Umar.
The Aviation Division had sought Rs8.4bn government guarantee in the face of challenges of accumulated liabilities. The Division had said that on one hand the PIA was being served default notices by Aircraft Lessor, on the other pressure is being exerted by vendors and service providers like General Authority of Civil Aviation, Saudi Ground Services and international fuel suppliers regarding the suspension of services.
However, the finance ministry did not agree to the financing, saying complete data should be provided as to how such financing would generate additional revenue for the PIA which was seeking the money for sustainable operations. Also, it wanted to reconcile payments due to foreign suppliers, service providers and vendors.
The ECC, however, allowed Rs5.6bn guarantee to enable the PIA to revive two grounded aircraft on an urgent basis to secure some new routes as part of the overall route rationalisation plan and smooth Haj operations.
The finance minister also allowed upward adjustment in government guarantees issued against dollar-denominated loans of the PIACL to offset difference arising out of exchange rate depreciation. “Additional guarantees to PIACL of Rs5.6bn for repair and maintenance of engines and acquisition of related spare parts for operationalising grounded planes would strengthen route rationalisation initiatives and add to revenue generation of the national flag carrier,” an official statement said.