ISLAMABAD: The Economic Coordination Committee has approved an additional guarantee of Rs20 billion for the Pakistan International Airlines for overhauling of aircraft engines.
The government approved bailout package forPIA, the fifth one in less than one and a half year.
The Government also enhanced sovereign guarantee ceiling to Rs195 billion to keep the national air carrier afloat.
The ECC meeting chaired by Prime Minister Shahid Khaqan Abbasi announced that with approved Rs.20 Billion PIA could meet expenditures for the overhaul of aircraft engines.
In order to facilitate PIA in obtaining these loans, the ECC increased the guarantee limit from Rs175 billion to Rs195 billion to enable the loss-making carrier to meet its expenses.
In a letter in September 2008, the federal government, being the majority shareholder in PIA, had given assurances that it would keep PIA as a going concern and had since been injecting money. And in November last year, the ECC increased the limit from Rs161.5 billion to Rs175 billion, which turned out to be insufficient due to mounting losses.
When the present government came to power, the maximum borrowing limit for PIA was Rs137.4 billion, which the ruling party increased by 42% in five years
PIA was on the active list of privatisation that the government shared with the International Monetary Fund under the last three-year $6.2-billion bailout package.In April 2016, parliament also amended the PIA Act of 1956, which prevented the transfer of management control to private investors and converted the entity into a company.
The PIA Chief Executive officer also briefed the meeting about the progress made so far in the efforts to turnaround the national flag carrier and to reduce its losses. The federal government is continuously giving bailout packages to the national flag carrier to bring it out of the severe financial constraints.
The last time the national flag carrier earned a profit was in 2002. Farrukh Saleem, an economic and financial analyst who had been appointed amicus curiae by the Supreme Court, has told the apex court that the PIA financial losses in 10 years were the result of political interference, leakage and a bad CAA policy.
The political parties have influence in unions of pilots, engineers, technical staff and officers, he informed the top court.
