Pakistan is considering converting a Rs8 billion ($85 million) loan into equity for Pakistan International Airlines (PIA), according to local reports.
Briefing several ministers on the financial position of PIA earlier this week, chairman Rao Qamar Suleman requested Pakistan’s prime minister Raja Pervez Ashraf to convert the federal loan into equity and allow the rollover of Rs 147 billion in loans held with various banks.
According to PIA reports, the Rs8billion loan was received last year and has a nine-year maturity with a 10% fixed interest rate.
The government of Pakistan is also the guarantor of Rs6.8 billion Sukuk certificates priced at six-month Karachi Interbank Offered Rate (Kibor) +175 basis points and Rs12.79 billion term finance certificates priced at Kibor +85 bps due in 2014.
PIA has a two loans signed in 2010 with National Bank of Pakistan (Bahrain) maturing this year. One loan, worth $70 million, was at one-month Libor + 550 bps. the second loan totalled $30 million. In 2013, the carrier has a $120 million bullet repayment from National Bank of Pakistan (Bahrain) amongst its loans maturing.
PIA reported a Rs7.81 billion net loss for the first quarter ended 31 March . This compared with a Rs4.24 billion net loss in last year’s corresponding quarter. The carrier said it suffered a 16% increase in fuel costs compared with the first quarter of 2011 and booked a Rs1.5 billion loss due to exchange rates.
Ashraf has instructed the finance ministry to provide $4.5 million in immediate assistance to PIA. The sum will be used to acquiring aircraft on dry lease basis.