KARACHI, Oct 12: Pakistan International Airlines (PIA) on Friday signed an agreement with the consortium of banks for restructuring short term borrowings of up to Rs4.9 billion.

The signing ceremony took place at PIA head office in the presence of PIA chairman and Secretary, Defence, Lt-Gen (Retd) Hamid Nawaz Khan. Managing Director PIA Ahmed Saeed signed the agreement on behalf of the airline.

Khaleeq Janjua, acting president, NBP; Zakir Mahmood, President HBL and Aamir Zafar, president UBL signed the agreement on behalf of their respective banks.

The restructuring is for five years with two years grace on principal and mark up payments will be picked up by Ministry of Finance to be convertible in to PIA equity.

The UBL-led syndicate includes UBL, MCB, Askari Commercial Bank, Bank Alfalah, Saudi Pak and Pak-Kuwait.

Over a period of five years, the Ministry of Finance will contribute around Rs2,800 million into PIA equity. PIA expects Rs14 billion equity participation by Government of Pakistan through mark-up payments for five years on over all financial restructuring by way of bridge finance facility/restructuring of the rupee existing debt/TFC issuance.

Speaking on the occasion, Chairman PIA, Lt. Gen. (Retd) Hamid Nawaz Khan, described the agreement a very significant headway towards overcoming PIA’s financial problem, which witnessed a very difficult environment when there was quite uncertainty in the airline.

He said with the help of Ministry of Finance the airline had been able to manage a financial restructuring and assured that that would greatly help the PIA in making a healthy recovery.

The chairman, PIA pointed out that during the quarter July- September 2001-02 Airline was running in profits, and in August it earned over Rs100 million profit and break even in September.

He said although the PIA, like other airlines, was hit by September 11 events, it has come out of the blue.

Gen. Hamid said Insha Allah, by early next year, the airline will turn around and enter into profitability.

“We will achieve the objectives we have set for us— achieve break even first and then enter into profitability.”

The UBL president, Aamir Zafar, the HBL president Zakir Mahmood spoke briefly on the occasion.

The signing ceremony was witnessed by the senior officials of the banks and DFIs.—APP