November 15, 2002	Friday	Ramazan 9, 1423

KARACHI, Nov 14: Pakistan International Airlines Corporation (PIAC), the national Flag carrier of Pakistan, signed a $70 million 5-year Morabaha Financing Facility on Tuesday to finance part of its Fleet Acquisition Plan for the purchase of 6 Boeing 747-300 aircraft from Cathay Pacific.

The 5-year Morabaha financing has been jointly arranged and participated by a consortium of leading Pakistani commercial banks including UBL, HBL and NBP. UBL is also acting as the Facility Agent for the facility.

Since the Facility is secured against the receivables generated by the sales of PIA tickets in UAE, UBL is also acting as collection agent on behalf of the rest of the syndicate members.

The six aircraft, five of them were already on lease from Cathay Pacific Airways, were purchased by PIA at most economical price of $62m. The sixth Boeing 747-300 joined the PIA fleet in Karachi on November 7.

The airline is pursuing a long-term fleet modernization plan that envisages induction of eight Boeing 777 wide body aircraft, seven Turboprop new technology aircraft, four used A-310-300 aircraft and two A-310-300 freighters over the nine year period as per the business plan for 2003-2011.

The financial results of PIA for the period January-September 2002 showed a pre-tax profit of Rs1.4 billion attributed to PIA’s sound policy measures including route restructuring, weeding out of uneconomical routes and cost cutting efforts.

The improved financial position of the airline has enhanced the scope for the implementation of the investment programme for replacement and renewal of the aircraft fleet.

The structure that is envisaged in this transaction is that of Morabaha Financing where the Lenders will purchase the aircraft directly from Cathay Pacific through a direct payment and sell them to PIA on a deferred payment.

The repayment of the Facility is spread over 60 monthly principle and profit repayments with first payment due at the end of first month after the drawdown.

PIA has also mandated United Bank Limited, Citigroup and Islamic Development Bank (IDB) to arrange another financing facility of up to $150 million for financing its pre-delivery payments to Boeing for the purchase of first batch of three Boeing B777-200 ER aircraft.—APP