LAHORE - PIAs plan to lease 40 new aircraft within next six years does not sound a financially viable option given its bleak financial health verified from unaudited Half Yearly Report (Jan-June 30, 2011), which was released on September 24, 2011, sources in the airline said. According to details, PIA MD, a couple of weeks back, had announced plans to lease 12 new aircraft after current Haj operation to be inducted by 2013 with plan of inducting a total of 40 new aircraft by 2017. As future outstanding payments in Operating Lease Arrangement relating to B777-200-ER fleet alone stand at Rs 6.122 billion, which the airline cannot meet from its revenues without resorting to cash injections and short or long term financing from commercial banks to pay loans, further escalating the already Negative Assets to Liabilities Ratio, sources claimed. PIA has secured Long Term Financing from commercial banks to the tune of Rs 26.827 billion during half year ending on June 30, 2011 which are based on unconditional and irrevocable Government of Pakistan (GOP) guarantees and by pledging as equity all present and future receivables of the corporation generated through sales of tickets and cargo services in UK and Saudi Arabia, having already pledged everything else in the past. The airlines ability to pay back lease instalments and outstanding liabilities have been seriously dented with unchecked rampant pilferages in procurement and intentional loopholes in RBD (Revenue Booking Designator) by a nexus of corrupt executives within PIA and a few powerful travel agents, a retired PIA officer said. In spite of investigations confirming that in recent past Umra and Haj seats were released on low fares to selected travel agents by senior executives of marketing even before they were offered for sale at higher fares announced by the airline, nobody has been punished although this pilferage contributes almost 39% to daily losses that are Rs 6 crores. Conflict of interest between executives responsible for technical spares and other items such as fuel, engine oil etc. procurement and engine overhaul contracts contribute to major chunk of pilferage, said PIA officer seeking anonymity. An aviation expert said that a number of commercial banks, hedge funds and financial institutions are active in the aircraft leasing business: the two largest and best-known CASL companies are General Electric Commercial Aviation Services (GECAS) and International Lease Finance Corporation (ILFC), with independent revenues of hundreds of billions of dollars. The three most common schemes for financing commercial aircraft are secured lending, operating leasing and finance leasing. However, there are other ways to pay for the aircraft, depending on the financial health of the airline and credit lines available to it, which are directly related to their current profitability. In some countries where airlines may be deemed less creditworthy operating leases may be the only way for an airline to acquire aircraft. Moreover, it provides the flexibility to the airlines so that they can manage fleet size and composition as closely as possible, expanding and contracting to match demand. MD Capt Nadeem Yousafzai, whose sole qualification for appointment as CEO of PIA is that he is a crony of the President, has absolutely no experience in administration. With accumulated losses of Rs 103 billion as of June 30, total liabilities of Rs225.3 billion and Corporation Current Liabilities exceeding assets by Rs 72.847 billion, the airline auditors - AF Ferguson and M Yousaf Adil Saleem - in their unaudited report dated Sept 24 for the Half Yearly Financial Report period have noted. These conditions indicate the existence of a material uncertainty which may cast significant doubt on the Corporations ability to continue as a going concern. Current Assets on 30 June 2011 stand at Rs20.515 billion as compared to Current Liabilities of Rs93.362 billion. When contacted spokesman of PIA told this scribe to send the questionnaire on his mailing address and promised that he would respond after consulting airlines management. But despite passing of more than two weeks, he did not respond. On Wednesday, his cell phone remained switched off.