PIA debt restructuring talks begin.

ISLAMABAD -- In a significant development, the government and representatives of commercial banks have initiated discussions to prepare a plan for the debt restructuring of Pakistan International Airlines (PIA) with the aim of keeping the struggling airline operational for another six months with a limited number of flights.

The 12-member committee consists of an equal number of representatives from the federal government and commercial banks, according to sources within the Ministry of Privatisation. They reported that the committee held two meetings on consecutive days and has been tasked with finalising the debt restructuring plan within two weeks.

Officials from the Ministry of Privatisation disclosed that the committee has also been assigned the responsibility of formulating a plan for an immediate borrowing of Rs15 billion by PIA to address its urgent needs, including fuel costs. The monthly cost of fuel to keep existing routes operational is estimated at Rs8.5 billion.

Usman Bajwa, the newly appointed Secretary of the Privatisation Commission, has been designated as the committee's convener. The committee includes representatives from the Ministry of Finance, PIA, and six commercial banks. As of the end of August, these six banks have collectively provided Rs230 billion in loans to PIA, including Rs193 billion in domestic debt.

Bajwa did not respond to requests for comments.

Last month, PIA requested a moratorium on its Rs260 billion domestic debt repayments to address an annual deficit of Rs153 billion, which is the shortfall between its sales and essential expenditures. PIA requires Rs3.1 billion per month to service its external debt of Rs109 billion and Rs7.5 billion for servicing its domestic debt of Rs260 billion as of the end of August. The airline, Pakistan's single highest loss-making entity, obtained an additional loan of Rs13 billion last month.

The Bank of Punjab has the largest exposure, with over Rs56 billion in loans to PIA, followed by Askari Bank Limited with Rs43 billion, JS Bank with Rs34 billion, NBP with Rs33 billion, Faysal Bank with Rs32 billion, Habib Bank Limited with Rs29 billion, and Bank Islami with Rs22 billion. Albaraka Bank has provided a Rs9 billion loan, and Soneri Bank's exposure to PIA is Rs5 billion, according to sources.

PIA's accumulated losses have reached Rs713 billion, with Rs285 billion worth of loans directly guaranteed by the federal government, not including loans obtained by PIA's...