PIA signs Dh255m facility

Pakistan International Airlines Corporation (PIA), the flag carrier of Pakistan, signed here yesterday a Dh255 million ($70 million) financing facility with three Pakistan-based banks for the acquisition of six Boeing 747-300 aircraft from Cathay Pacific.

This five-year Morabaha facility has been jointly arranged and participated by a consortium of banks including United Bank Ltd (UBL), Habib Bank Ltd (HBL) and National Bank of Pakistan (NBP).

PIA has also mandated UBL, Citigroup and Islamic Development Bank (IDB) to arrange another financing facility of up to Dh550 million ($150 million).

This facility, according to PIA officials, is to finance its pre-delivery payments to Boeing for three Boeing B-777-200 ER aircraft.

While the contribution of HBL and NBP in the $70- million deal are to the extent of $25 million each, UBL has put in $20 million to the facility which is to be repaid in 60 monthly instalments by PIA with first payment due at the end of the first month after the drawdown.

The six aircraft, five of which were already on lease from Cathay Pacific, were purchased by PIA for an economical price of $62 million. The sixth Boeing 747-300 joined the PIA fleet in Karachi on November 7.

According to PIA officials, the airline has been pursuing a long-term fleet modernisation plan that envisages induction of eight Boeing-777 wide body aircraft, seven turboprop new technology aircraft, four used A-310-300 freighters over the nine-year period as per the business plan for 2003-2011.

According to Shaukat Mir, the general manager of UBL, his bank has also acted as facility agent apart from participating in the financing.

PIA has posted a pre-tax profit of around $25 million (Rs1.4 billion) for the nine-month period ending September 30.

According to PIA officials, the sound policy, including the restructuring and cost-cutting moves, has helped the airline boost its bottomline during an unfavourable time for the aviation industry.

PIA plans to begin service on three new routes - Nairobi, Glasgow and Mashad (Iran) - soon.