The Pakistani government is planning a massive aid package to the debt-ridden flag carrier PIA - Pakistan International Airlines (PK, Karachi Int'l) which would include new loan guarantees, a debt freeze, and an immediate cash injection, The Express Tribune has reported.

The measures were discussed in detail during a meeting chaired by the Prime Minister Imran Khan on January 1, 2019.

If the plan is adopted, the government will immediately issue guarantees for PKR15 billion rupee (USD107 million) in loans as an interim rescue aid. In addition, the PKR80 billion rupee (USD572 million) debt to the Pakistani Civil Aviation Authority (PkCAA) will be frozen.

Finally, the airline could also receive up to PKR485 million rupees (USD3.4 million) in direct cash injections for current maintenance needs and the upgrade of in-flight entertainment systems of the carrier's B777s. According to the ch-aviation fleets module, the airline currently operates six B777-200(ER)s, two B777-200(LR)s, and four B777-300(ER)s.

The PM also ordered his cabinet to draft legislation by the end of March 2019 which would allow PIA to assume operational control of the country's capital airport at Islamabad Quaid-e-Azam Int'l. The airline would then relocate its headquarters from Karachi to Islamabad by July this year. PIA operates 151 weekly departures from Karachi Int'l and 141 from Islamabad. It also has its third, smallest base at Lahore Int'l.

The government is also planning to draft a new national aviation policy which would tighten the cooperation between the country's airports, the PkCAA, and the flag carrier. According to the initial proposal, PIA and other Pakistani carriers would then receive discounts on airport fees, tax cuts, and preferential slot allocation, as well as potential subsidies on economically unsustainable domestic routes.

Furthermore, the government is also considering ending the open skies regime and thus reducing market access for foreign airlines serving Pakistan.

Potentially, the PIA CEO could also get a seat on the PkCAA board.

The Sindh Assembly, a local legislature in the province where Karachi is located, already adopted a motion seeking to block the relocation of the carrier's headquarters to the national capital, the Dawn has reported.

As of mid-December, PIA had an accumulated debt of PKR247 billion rupees (USD1.8 billion). Recently, the new CEO Arshad Mahmood Malik said that it would be easier to launch a new carrier than to try to revive PIA.