PIA suffers loss of 700 Million

by blogstique · October 23, 2023

Paksitan International Airline in loss as the prolonged and contentious financial dispute between Pakistan International Airline (PIA) and Pakistan State Oil (PSO) inflicted a colossal loss of Rs700 million upon the national flag carrier. PIA’s flight operations, which had come to a grinding halt due to this ongoing discord, saw a partial resumption on a recent Sunday, following a resolution reached with PSO concerning the unsettled dues.

This festering issue has proved immensely detrimental to PIA, causing a substantial financial hemorrhage of more than Rs700 million as a consequence of the disruption in its flight operations. The unfortunate fallout was the grounding of over 65 domestic and international flights on that fateful Sunday.

However, following the much-awaited agreement, PIA flights bound for Jeddah from major Pakistani cities such as Karachi, Islamabad, Lahore, and Multan, along with a flight from Islamabad to Riyadh, finally took off. This momentary resumption brought a sigh of relief to travelers and those associated with PIA’s operations.

Simultaneously, the PIA CBA Union People’s Unity convened an emergency meeting, during which they vehemently condemned PSO for its reluctance in providing fuel to PIA flights. The union’s president, while expressing their indignation, issued a stern warning that they would not allow the privatization of PIA under any circumstances.

In the midst of this turbulence, passengers are strongly advised to verify the status of their flights with PIA before commencing their journeys, given the persisting uncertainties.

The core of the Problem:

To delve into the heart of the matter, PIA relies on Pakistan State Oil for its fuel supply. However, over recent weeks, this critical supply chain became embroiled in a protracted standoff between these two state-owned entities. The situation had been progressively deteriorating, but it reached a tipping point when PIA’s flight operations ground to a halt.

Flight cancellations had been plaguing PIA for some time, but on that ill-fated Sunday, the numbers surged to an alarmingly high level. What made this situation particularly dire was the fact that, for the first time since the onset of the Covid-19 pandemic, flight crews reported for duty, yet the planes remained grounded.

A source revealed the staggering extent of the crisis, stating, “A total of 72 domestic and foreign flights were affected. In just one day, the national airline sustained a loss of Rs700 million due to the inoperability of its flights.” This source also pointed out a worrying lack of communication between the top managements of PIA and PSO.

This vexing payment dispute arose from a recent decision by the Federal Board of Revenue (FBR), promising PIA a sum of Rs1.8 billion to revive its frozen accounts. Unfortunately, the airline’s management was unable to benefit from this financial relief. Subsequently, a Standard Operating Procedure (SOP) was devised, stipulating that PIA would make daily advance payments to PSO for fuel. In adherence to this arrangement, PIA paid Rs100 million on Monday, Rs125 million on Tuesday, Rs150 million on Wednesday, Rs155 million on Thursday, and Rs220 million on Friday.

The Sunday in question brought a tense standoff over fuel payments, as PIA reached its daily limit. During the previous night and into the morning, PIA had undertaken four flights, requiring significant fuel supplies. Fuel purchases amounted to Rs40 million for a flight to Toronto, Rs20 million for flights to Beijing, and Rs30 million for flights to Istanbul and Kuala Lumpur.

In sum, a staggering 72 international and domestic flights operated by PIA bore the brunt of this situation, resulting in approximately 10,000 passengers being stranded and unable to travel. The single-day loss to the airline stood at an astonishing Rs700 million, highlighting the severity of the flight cancellations.

A PIA spokesperson conveyed the partial restoration of flight operations, explaining that “five flights from different cities of the country were operated on Sunday evening.” This reprieve was achieved through the determined efforts of PIA’s management, marking a step towards mitigating the distressing impact of the dispute.