Islamabad: The government has approved a Pakistan International Airlines’ request for acquiring five European-made aircraft on lease aimed at cutting financial losses of the state-run carrier whose accumulative losses have shot up to Rs267.8 billion.
The decision was taken by the Economic Coordination Committee (ECC) of the cabinet, headed by Finance Minister Ishaq Dar.
Whereas, the other request was turned down to acquire 5 more aircrafts on lease.
It approved sovereign guarantees for obtaining a loan of $150 million for repairing Boeing 777 aircraft and extended existing guarantees of Rs33.5 billion until the end of current financial year in June 2014.
The PIA management had shortlisted 10 A-319 and A-320 aircraft based on their combined score according to their financial and technical parameters. According to a handout issued by the Ministry of Finance, the lease of the remaining five aircraft was rejected because of their low combined score.
PIA emphasises that it needs at least 10 airplanes to prop up revenues and cut financial losses.
Aviation Secretary Imran Ali Gardezi claimed in the ECC meeting that the PIA management had reduced losses last month from Rs3.3 billion per month to Rs1.5 billion.
The finance minister observed that the lease of aircraft would not only restore PIA’s international credibility, but would also improve its image.
The ECC approved guarantees for borrowing $150 million from Exim Bank of US and Islamic Corporation of Insurance and Export Credit (ICIEC) for servicing and repair of nine Boeing 777 aircraft. However, the guarantees depend on clearance of financing terms by the Finance Division.
The ECC also extended the validity of existing guarantees for PIA’s term loans of Rs33.5 billion until June 30, 2014.