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Let’s do a simple calculation for increasing PIA fleet from 27 to 49. Let’s assume all 737 or A320 are bought. This will require $2.2B. Assume Pakistan is lucky to finance it at 10% rate of interest. Total interest cost will be Rs. 66B. Let’s reduce it to 50B. Now assume PIA’s revenue doubles and extra 250B is due to these 22 aircrafts (its first quarter revenue is 59B). PIA will require a GP margin of 20% to cover this interest expense. Its GP margin is below 10%. In previous years it had gross losses. I am ignoring the cost of depreciation. Remember that PIA’s existing interest cost is about 70B per year which also needs to be paid from its operations. I am ignoring it for simplicity. Its total short and long term liabilities are Rs. 700B. If there are unfavourable economic conditions then the losses will mount further. PIA is borrowing to finance its losses and interest payments. This is unsustainable. This airline has to be shut down immediately.