Pakistan International Airlines (PIA) has secured the first part of a Rs20 billion ($311 million) rescue package approved by the country's military leadership in June, which is vital for operations to continue.

The ailing flag carrier says five local banks have agreed to provide a Rs4.73 billion emergency loan. The six-month bridging loan carries an interest rate of about 14.5% and is considered a stop-gap measure until the full Rs20 billion package can be secured.

"We have immediate pressing liabilities that we need to cover, such as paying for spares," says PIA.

The airline is in severe financial difficulty and says it suffered a net loss of nearly Rs2 billion in the first half of its fiscal year, raising accumulated losses to Rs11 billion.

The Pakistani government overhauled the airline's management this year and in June approved the package which allows it to work with the Ministry of Finance to raise money to keep operations intact.

Source: Flight International