Boeing, Airbus likely to stop supplying spare parts to Pakistan International Airlines

Marred by “serious cash flow problems,” Pakistan International Airlines (PIA) is expected to stop receiving supply of spare parts from Boeing and Airbus. According to a report by The News, Boeing and Airbus, which are top aircraft manufacturers, are likely to discontinue the supply of spare parts to cash-strapped Pakistan by mid-September. PIA, in a summary sent to the Economic Coordination Committee (EEC) for an emergency bailout, expressed its inability to pay its creditors, aircraft lessor, fuel suppliers, airport operators, and the International Air Transport Association (IATA). Pakistan’s largest airline which operates a fleet of more than 30 aircraft stated that it is facing a liquidity crunch. Not all good for PIA Pakistan’s carrier also informed that it has been forced to ground five out of 13 leased aircraft and it has been considering grounding four additional aircraft this week due to the prevailing crisis. PIA, in the summary, also highlighted that keeping the state-run airline operating is necessary to determine the fair price of its shares for privatisation. EEC rejects PIA’s demand In a meeting on Wednesday EEC rejected the PIA demand for the provision of Rs 22.9 billion and deferment of Rs 1.3 billion per month to the Federal Bureau of Revenue (FBR) as well as loans and markup amount till the finalisation of the restructuring plan. At the meeting, Pakistan’s Ministry of Aviation also submitted a summary on “Financial support for PIACL & its Restructuring”. Addressing the meeting, the secretary of Aviation spoke in detail about the financial burdens, liabilities of PIA, and the need for restructuring the organisation. The ECC reviewed and discussed the timelines as well as costs of the restructuring plan. After extensive deliberation, a decision was taken to constitute a separate committee for the assessment of PIA’s restructuring plan. The ECC also rejected the request for deferment of the payments of Rs 1.3 billion per month, which PIA pays to FBR against Federal excise duty (FED), and Rs 0.7 billion per month which PIA pays to the Civil Aviation Authority (CAA) against embarking charges. During the meeting, a decision was taken that the Finance Division and State Bank of Pakistan would support PIA in tackling its financial challenges after a concrete plan for restructuring the airlines had been finalised and submitted to the satisfaction of the committee.