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Day-to-day expenses: PIA arranges financing facility of $130 million

by November 24, 2016 General
The airline remains engaged in expanding its flying operations. PHOTO: FILE

The airline remains engaged in expanding its flying operations. PHOTO: FILE

KARACHI: Pakistan International Airlines (PIA) has arranged a financing facility of $130 million (Rs13.65 billion) to meet day-to-day expenditures and improve the standard of services to passengers, according to a handout issued Thursday.

“The facility will be by PIA for its general working capital requirements and improvement in passenger services,” spokesman for the national carrier said.

The lenders include Credit Suisse Singapore Office, United Bank Limited and National Bank of Pakistan. The agreement to this effect was recently signed in Dubai.

“The facility reflects the confidence and trust of the international financing institutions in the operations of PIA,” he added.

The cash-strapped airline reported last month that its accumulated losses have increased by 2.3% to Rs267.56 billion in the quarter ended March 31. In the calendar year 2015 alone, the losses piled up by Rs32.13 billion.

In a bid to overcome the losses, the airline remains engaged in expanding its flying operations on various domestic and international destinations.

For this purpose, it has introduced premier flights from Islamabad/Lahore to London.

The premier service was launched after acquiring the latest long-hauled aircraft from SriLankan Airlines on wet lease. As per the agreement, PIA would acquire two more aircraft from the airline by February to run more premier flights from other domestic airports to London and other international destinations.

Besides, PIA is evaluating an order for wide-body Airbus and Boeing jets as it looks to upgrade its ageing fleet.

An official of the airline, however, confirmed that “the arranged financing facility of $130 million has nothing to do with the under consideration acquisition of aircraft (on wet or dry lease).”

The airline is looking at the Airbus A330 and A350 models, Reuters reported earlier.

PIA would consider purchasing the aircraft directly from the manufacturer and financing the order through a sale and leaseback arrangement. It would also consider a direct leasing agreement, known as a dry lease.

A sale and leaseback is when the airline sells the jet to a lessor who then leases it back, the news agency added.

Published in The Express Tribune, November 25th, 2016.

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