PIA sorts out issues with PSO for smooth fuel supply
Business
Airline’s operations remain disrupted on Saturday with another 59 flights cancelled
LAHORE (Web Desk/Dunya News) – A Pakistan International Airlines (PIA) spokesperson on Saturday said they had reached an agreement with the Pakistan State Oil (PSO), adding that the fuel supply would return to normal in the coming days.
The statement comes after it was reported that the PSO had agreed to increase the credit limit for the airline to Rs500 million while the national flag carrier would continue paying Rs100m daily.
It means the PIA flight operations will gradually improve, much to the relief to its management which saw huge losses in recent days after the latest crisis emerged on Oct 14 after PSO’s refusal to supply fuel over not paying its dues.
59 flights cancelled on Saturday
On Saturday, another 59 PIA flights were cancelled as the national flag carrier was unable to secure funds necessary for its daily operation. The overall number of cancelled flights stood at 538 on Friday [Oct 27].
Earlier on Friday, the Economic Coordination Committee (ECC) approved a financial support of Rs8 billion to the PIA for the purchase and repatriation of two Airbus A320 aircraft, grounded in Jakarta since Sept 2021.
The two planes were acquired in 2015 through a six-year lease agreement with a monthly payment of around $550,000, which also maintenance and insurance costs. However, the aircraft were sent to Jakarta for re-delivery after the deal expired in 2021.
Later, the government subsequently opted to buy the two aircraft but could not execute the decision amid lack of funds – a scenario changed by the ECC’s approval.
It is reported that the planes will return to Pakistan in Nov and Dec after the payment of each of the two instalments.
However, the PIA has failed to secure loans from commercial banks and a government bailout package as Islamabad is facing a severe financial crisis.
It is also awaiting an International Monetary Fund (IMF) team which will reach the federal capital on Nov 2 for the first review of the $3 billion standby arrangement, as the world’s top lender pressing the government hard to privatise the loss-making state-owned enterprises (SOEs).
But the financial crisis is not limited to the national flag carrier as the Senate Standing Committee on Industries and Production has been informed that no one is interested in buying the Pakistan Steel Mills (PSM).
Read more: No one wants Steel Mills, to be removed from privatisation list
On Thursday, a PIA spokesperson had told Reuters that flights were being scheduled as per the availability of fuel.
The PIA and the PSO have been locked in a dispute over payments. The airline says the PSO has suspended its credit line for the fuel, and is now releasing supplies only against a daily advance payment.
"The PIA is trying to manage funds," the statement said, adding that the resumption of the usual schedule will depend on the availability of funds.
Earlier this month, Caretaker Privatisation Minister Fawad Hasan Fawad had said the airline had accumulated over Rs713b ($2.55bn) in losses as of June 2023. "We're not in a position to bear it anymore," he said.
Pakistan hopes to resume PIA flights to Britain in the next three months after services were suspended following a fake pilot scandal in 2020.
The PIA flights to Europe and the UK have been suspended since then after the European Union's Aviation Safety Agency revoked the national carrier's authorisation to fly to the bloc following the pilot licence scandal.
