KARACHI, Sept 1: Pakistan International Airlines plans to sell more than Rs25 billion eight-year Sukuk bonds next month in a move to generate funds for infrastructure development and cut borrowing costs, a top official said.

“The bond has components of both local and foreign currency and we are in the process of finalising procedural matters,” said Zaffar A Khan, PIA chairman.

“Hopefully it will be offered next month. The main objective of the whole move is to generate funds for infrastructure development and remove some burden of borrowing costs, which are currently very high.”

He said the lead manager for the bonds sale had already been hired, which had almost done its job required to put it on sale next month.

“These steps we have taken are in line with the short-term measures, designed to release some financial burdens to some extent and also focus on infrastructure development, which requires immediate attention.”

He said under the short-term strategy existing business plan and operations had also been reviewed, which led to stop on flights to several destinations, adding no profit to the airlines’ balance-sheet.

“So we stopped flights to Colombo, Singapore, Chicago, etc. But we are very clear that it has been done for the time being and can be resumed once the airline comes out of the crisis,” Khan said.

The national flag carrier last week reported an after-tax loss of Rs7.7 billion in the first half of 2007 up 20 per cent from Rs6.7 billion incurred in same period of last year.

Financial results for the period January-June 2007 released by the PIA, suggests revenue increase by four per cent supported by passenger revenue growth of 7.1 per cent, which was partially offset by a 12.6 per cent drop in cargo revenue.

However, the chairman says the airline which currently bears Rs1.2billion loss a month would take time to get on breakeven. But he sees major change in the next six to eight months.

“We have designed short-term strategy, which is likely to bear fruit by December, I believe,” he said.

“Then we would take some long-term measures, which need two to four years to get desired results.”

He said the PIA’s revenue management system was being revived, which would help improve the airline’s financial position to some extent.

“Recent increase in Haj fares is also a part of campaign to generate funds, as we bear serious losses in such operations and need some support to continue that,” he added.

He said the PIA did not want to operate Haj flights solely and had asked the authorities to open it for all other airlines but it was ruled out by the government.