PSO approved Rs500 million credit relief for PIA last week.
National carrier owed Rs26.4 billion to PSO in fuel payments.
Over 600 flights cancelled amid disrupted flight operations.
Pakistan International Airline (PIA) Monday said that the national carrier would be able to operate more flights following a credit line extension by the Pakistan State Oil (PSO).
The state-owned oil company last week provided Rs500 million in credit relief to the national airline as it faces a severe financial crunch with hundreds of flights being cancelled slashing the airline’s daily revenue by up to 70%.
“The PIA’s disrupted operations are heading toward restoration after an improved fuel supply,” the airline said.
According to the national carrier, its flight operations are expected to come back to normal routine in the next few days with more improvement in the fuel supply.
PIA had been paying Rs100 million to PSO for the daily purchase of fuel and owed Rs26.8 billion ($97.37 million) to the state-owned oil company.
A meeting was held on October 16 between senior officials from both state-owned organisations to determine the course of action.
PIA’s financial woes
The national carrier has been facing a severe financial crunch with severe disruptions in its flight operations resulting in the cancellation of more than 600 flights in recent days.
The airline’s daily revenue has dipped to Rs300 million from the previous Rs700 to Rs800 million.
Meanwhile, the caretaker government is striving to get Rs8 billion loan guarantees to remain within the International Monetary Fund’s (IMF) agreed limits, The News reported quoting sources.
It is to be noted that the Economic Coordination Committee (ECC) last week, approved a bridge financing of Rs8 billion through CAA resources that would be used for payment of $25 million in liabilities owed to Malaysia for the procurement of two aircraft.
There was an outstanding amount of $30 million but after tough negotiations, PIA convinced them over payment of $25 million.
The airline had sought Rs24.6 billion for its operational expenses from the government of Pakistan. The Ministry of Finance had initially rejected the demand for this injection on the basis that in the past, PIA came up with financial injections with the commitment to undertake a restructuring plan but it was never implemented.