Pakistan International Airlines (PIA) has secured the first part of a Rs20 billion ($311 million) rescue package approved by its government in June, giving it breathing space amid a cash crisis that threatens to force major cuts.
The state-owned airline said early in August that it had obtained a Rs4.73 billion emergency loan to cover immediate liabilities. The six-month bridging loan was provided by a consortium of local banks at an interest rate of 14.5%.
General manager for public affairs Imran Gardezi says it was "essential for PIA to get this money" as the carrier has immediate pressing liabilities that need to be covered to keep its aircraft flying.
In June, Pakistan's military leadership approved a so-called "rescue package", which allows the airline to work with the Finance Ministry to raise Rs20 billion from local banks. PIA has been in severe financial difficulty for some time and the emergency measures approved by the government also allow it to revamp its route network, outsource non-core operations and outlaw unions. International labour groups are blasting PIA and the government for suspending all union activities. The International Federation of Air Line Pilots Associations says it violates freedom of association accords and may have an impact on flight safety.
But PIA says there are some bright spots on the horizon, claiming passenger load factor improvements and a rise in employee productivity. The rescue package now being put in place does not cover job cuts - despite the fact that PIA, with 22,000 employees and 49 aircraft, has one of the highest employee-to-aircraft ratios in the industry.
Source: Airline Business
