PIA Pays $48M for Hajj Flights

Hi everyone! I hope you are all doing well. Welcome back to another blog. This article will discuss the topic in detail “PIA Pays $48M for Hajj Flights”. During the recently held meeting of the Economic Coordination Committee, chaired by Finance Minister Ishaq Dar, an important development came to light regarding Pakistan International Airlines(PIA) and its operations. The General Authority of Civil Aviation (GACA) Saudi Arabia has formally issued a notice to PIA, urging the immediate payment of a substantial sum of $48 million. PIA’s operations, including the significant Hajj flights, could be suspended if we don’t make this payment.

The Civil Aviation Authority informed the committee about a notice issued by GACA KSA. The notice emphasized the immediate settlement of $48 million by PIA. The payment is crucial for the smooth operation of the airline, especially for Hajj flights. This poses a financial challenge for PIA, requiring prompt action to avoid disruptions during the upcoming Hajj season.

The General Authority of Civil Aviation (GACA) requires that we settle the outstanding dues promptly to initiate the repatriation process. The repatriation operation for over fifty thousand Hujjaj, who have already embarked on their journey to the Kingdom of Saudi Arabia (KSA), will remain on hold until the payments are settled.

In a related development, crucial information about AerCap, a PIA lessor, has been revealed. Startlingly, AerCap seized PIA’s B-777 aircraft on May 29, 2023, in Kuala Lumpur, Malaysia. The aircraft was eventually released after PIA fulfilled overdue payments and presented receipts through IATA clearing House, as per the court order.

Unsettling reports have also emerged, disclosing that Willis Leasing, yet another lessor with ties to PIA, has resorted to filing a lawsuit in a court within the United States. Willis Leasing initiated a lawsuit due to our non-payment of financial obligations. We are actively engaged in the process of removing two A-320 aircraft engines, which Willis Leasing had leased to us, from our possession. We will promptly return the engines to their rightful owners under forced circumstances. The gravity of the matter is evident from the fact that reliable sources present during the crucial meeting have verified this course of action.

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Alliana insurance broker, a prominent insurance provider, has recently issued a termination notice to Pakistan International Airlines (PIA), a major airline company. The termination notice highlights the urgent need for PIA to settle its overdue payments. Not making these payments promptly will result in the unavailability of insurance coverage, which will lead to the complete suspension of PIA’s operations.

In addition to the insurance predicament, the International Air Transport Association (IATA) took action last week by issuing a final warning to PIA. This warning specifically demanded the immediate payment of PIA’s outstanding dues, totaling a substantial amount of $2.8 million. The deadline for compliance with this notice was set for June 21, 2023. Failure to meet this deadline would have had severe repercussions, potentially resulting in the suspension of PIA’s IATA membership. Consequently, such a suspension would have directly impacted PIA’s flight operations.

Fortunately, on June 23, 2023, PIA managed to overcome significant obstacles and successfully made the payment to settle its outstanding dues to IATA. However, it is important to note that this achievement was not without difficulty. PIA’s management and financial team had to navigate through a challenging situation to fulfill their financial obligations.

Despite the successful payment made by PIA, the underlying issue of cash flow problems persists. If this issue remains unresolved and the existing cash flow problem continues, there is a high likelihood that a similar situation may re-emerge shortly, once again posing a threat to PIA’s operational stability and the availability of essential insurance coverage.

The Economic Coordination Committee (ECC) convened a crucial meeting and made a significant decision regarding the financial concerns of Pakistan International Airlines (PIA). The ECC, after careful consideration, unanimously approved the allocation of Rs. 4 billion to address the pending claims, which amounted to a staggering Rs. 22 billion due to accumulated markup until June 2023. This much-needed financial infusion aims to alleviate the burden on PIA. And it prevents any potential disruptions to its flight operations in the imminent future.

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In light of the pressing situation, Prime Minister Shehbaz Sharif, demonstrating proactive leadership, took swift action. He convened a high-level committee under the distinguished chairmanship of Ishaq Dar, a renowned figure in economic and financial matters. The primary mandate of this esteemed committee is to delve into the intricate details of PIA’s challenges. And devise comprehensive strategies for its restructuring, reformation, and eventual revival.

The committee meticulously designed its composition to include a diverse range of expertise and perspectives. Notable members, including the Railways and Aviation Minister Khawaja Saad Rafiq, join Ishaq Dar. Also present are Ahsan Iqbal, the Planning Minister, Syed Naveed Qamar, the Commerce Minister, Jahanzeb Khan, the Special Assistant to the Prime Minister, and the Secretary of Aviation. This distinguished panel will engage in rigorous discussions, utilizing their collective wisdom, experience, and knowledge. Their goal is to explore and evaluate options to revitalize PIA.

The committee’s arduous task encompasses analyzing PIA’s current structure, operations, financial health, and market dynamics. They will assess the root causes of the airline’s challenges diligently. We will identify areas that require immediate attention and long-term strategic interventions. The committee will scrutinize various approaches, including financial restructuring, operational enhancements, regulatory reforms, and strategic partnerships. The objective is to develop a comprehensive roadmap. The roadmap aims to address existing issues and position PIA for sustainable growth and success in the aviation industry.

Undoubtedly, the journey toward revitalizing PIA will be complex and multifaceted. The high-level committee, led by Ishaq Dar, is working collectively and using their expertise for the national airline. The committee’s unwavering commitment, extensive knowledge, and visionary thinking will revitalize PIA and contribute to Pakistan’s economic development.

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The aviation minister briefed the prime minister on the proposed route map and transformative measures for PIA’s upliftment. The prime minister commended the minister’s efforts and expressed confidence in PIA’s ability to overcome financial challenges.

During the meeting, there was a consensus on the urgent need to expand PIA’s fleet from 27 to 49 aircraft. The goal is to navigate PIA out of its current difficulties and establish a strong foundation for the airline’s success. Prime Minister Shehbaz highlighted the detrimental effects of previous government’s statements. Leading to PIA losing Europe and US routes and incurring significant financial losses.


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