Claim: Pakistan International Airlines (PIA) has successfully cleared all its liabilities, debts, and arrears ahead of privatisation.
Fact: Pakistan International Airlines (PIA) has not cleared its liabilities and debts. PIA itself released a statement clarifying that its debts have not been cleared.
On 3 April 2024, Economy.pk published an image (archive) on their Instagram page with a caption claiming that PIA has cleared all its financial losses and debts and has become an attractive investment opportunity ahead of its privatisation, stating “Pakistan’s economy receives a significant boost as Pakistan International Airlines (PIA) successfully clears its losses, debts, and arrears.”
The claim was also published by mainstream news outlets such as ARY News on the same day, in an article headlined “Good news for economy: PIA’s liabilities, debt cleared” (archive), and by social media users on various platforms.
Fact or Fiction?
On 4 April 2024, PIA issued a public letter to the compliance department of the Pakistan Stock Exchange clarifying that PIA officially denies the claim that PIA’s debts have been cleared, and mentions ARY News’s report titled “Good news for economy: PIA’s liabilities, debt cleared” alleging that ARY News erroneously extracted the claim out of the promotional material released in the past few days advertising PIA’s privatisation.
In this letter, PIA explicitly states, “PIACL has officially denied shifting of loans and clearing-off debts as of yet and we believe PSX has also issued a rebuttal on the subject matter”. The same notice can be found on the PSX website here.
Statements such as “Pakistan International Airlines successfully clears its losses, debts, and arrears.” (Economy.pk) and “all financial losses and debts of the National Airline have been cleared” (ARY News) imply the debts were paid in full and were paid by PIA itself.
Contrary to claim that PIA has cleared all its liabilities and debts, official reports suggest that a debt restructuring plan has been agreed upon. This plan involves transferring the debt burden from PIA (a state-owned enterprise), to the federal government’s finance ministry, through the PIA holding company, according to official documents.
This move essentially shifts the burden of PIA’s liabilities onto the federal government but does not mean the debts have been paid or “cleared”.
According to two articles published in The Express Tribune on 2 February 2024 and 28 March 2024, the government and commercial banks have finalised a Rs 268 billion debt restructuring plan for PIA. This plan involves making principal and interest payments from the federal budget after PIA has been privatised. The article states:
- “The Ministry of Finance, abandoning its previous stance of not incorporating PIA debt into public debt, now commits to making principal and interest payments from the budget.”
- “Under the agreement, the government will use PIA sale proceeds for principal payments, resorting to the budget if insufficient funds are available.”
- “Banks, in return, accept a 10-year debt rollover with a 12% annual interest rate, amounting to Rs 32.2 billion in annual interest payments.”
These details clarify that PIA has not cleared its debts. Instead, the PIA Holding Company has approved the restructuring of the airline’s Rs 268 billion commercial debt, incorporating it into the public debt. The debt still must be paid in the future by the government using proceeds from the sale of PIA and the federal budget.
Another misleading aspect of the claim is that the restructuring has effectively increased the total amount that must be paid to clear the debt by extending it by 10 years, resulting in more interest payments. Therefore, framing the development as an example of debts being dealt with or cleared successfully is misleading.
The claim that PIA has successfully cleared all its liabilities and debts is misleading.
Virality
The claim received hundreds of interactions across multiple social media websites. We found the claim shared on X here, here and here, Instagram here, and Facebook here, here, here, here and here.
ARY News, a major news website which receives on average more than 3.9 million views per month, also published the claim.
Conclusion: The claim that PIA has cleared all its liabilities, debts, and arrears ahead of privatisation is misleading.
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Background image in cover photo: FlightGlobal
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