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KARACHI: After Riyadh’s assurance to Pakistan of a $6-billion assistance package, a Saudi prince is now keen to rescue the country’s second largest airline, Shaheen Air International, from the financial crisis.
Shaheen Air has finalized a deal with a Saudi prince. The takeover is likely to happen over the course of next two months, said a statement released by the airline on Thursday.
“We have finalized the deal with a Saudi prince. We will be conducting a press conference very soon to announce about our investor and share details of the acquisition. This deal will be a breakthrough for the airline as well as for the Pakistani aviation industry,” said Shaheen Air acting CEO Javed Sehbai in the statement.
Shaheen Air has been grounded for the last five months due to default on payment of government dues of more than Rs3 billion. The airline owes Rs1.5 billion to the Civil Aviation Authority (CAA) and Rs1.6 billion to the Federal Board of Revenue (FBR) on account of services and taxes. The dues accumulated in the three months prior to the suspension of operations by the airline.
The airline’s flight operations have remained suspended since May 2018 except for special Hajj flights and a flight that brought back stranded passengers from China.
The airline will simultaneously recommence operations on all its 11 routes after it is able to pay the dues. The airline has also to pay a huge sum to its employees as it employs about 4,000 people.
“We are very thankful to our regulator CAA and the FBR. Due payments to government regulatory bodies and our employees’ salaries are our first priority and will be cleared in the first stage of our investment plan,” said the acting CEO. “It’s a matter of a few weeks that Shaheen Air will be in the skies again and shine brighter than before.”
Before the current crisis, the airline was operating on 18 routes with a fleet size of more than 15 aircraft, which has now been cut to only seven.
The Saudi prince will acquire shareholding in Shaheen Air but Pakistan’s law does not allow foreign investors to acquire 100% stake in any of the local airlines.
The airline is also contacting local travel agents to improve the situation as the carrier’s revenues have been stuck with these agents who held back the payments because of fear of losing their security deposits which they had given to Shaheen Air while starting business with the airline.
The rupee depreciation of around 9.6% to the US dollar from December 2017 to April 2018 also badly hit financial health of the airline as it makes a majority of its payments in dollars, according to Shaheen Air Chief Marketing Officer Zohaib Hassan.
Shaheen Air has been working in tough market competitions and its absence has given a chance to other airlines to increase their market share. Currently, one-way fare for Karachi to Islamabad has shot up to Rs14,000 to Rs26,000 compared to the range of Rs10,000 to Rs14,000 prior to Shaheen Air’s suspension of operations.
The airline’s suspension of operations has not only caused losses to consumers due to uncompetitive fares, but has also posed a risk to the jobs of thousands of Shaheen Air employees.