PIA Suffers Hard Currency Loss as NYC Ends Hotel Deal
Pakistan International Airlines (PIA) is set to lose a crucial revenue stream in hard currency following New York City’s decision to close the asylum arrival centre and emergency relief shelter housed at the PIA-owned Roosevelt Hotel. The three-year agreement, valued at USD220 million, has been a significant source of foreign exchange for the state-owned airline, which has long struggled with hard currency shortages.
New York City signed the deal in May 2023, during a period when it was processing approximately 4,000 immigrants per week. Under the arrangement, around 75% of these arrivals were managed at the Roosevelt Hotel, a facility that became central to the city’s immigration processing and emergency relief efforts. However, New York Mayor Eric Adams announced on social media that the centre would close within the coming months, a move that signals the end of the lucrative contract for PIA.
The decision to shut down the facility has raised concerns for PIA, which owns the Roosevelt Hotel through its holding company, PIA Investment Limited. The hotel, which has been in the airline’s portfolio since 2005, has provided a steady inflow of hard currency—an asset in a market where PIA regularly faces financial challenges. The loss of this revenue stream is expected to exacerbate the airline’s ongoing struggle with foreign exchange, potentially impacting its ability to modernize its fleet and improve operations.
The controversy surrounding the Roosevelt Hotel is not new. Over the years, there have been on-again, off-again discussions about selling or redeveloping the property. In early 2024, Pakistan’s then-caretaker government entered into a USD7.8 million agreement with a US consortium led by Jones Lang LaSalle Americas. This deal was aimed at assisting with either the development or the sale of the hotel, a move that coincided with broader efforts by the government to privatize PIA along with other state-owned enterprises.
The current Pakistani government, elected last year, has continued to advocate for privatization as part of its reform agenda. Despite this push, the Roosevelt Hotel has yet to secure a permanent redevelopment partner or achieve a sale. The persistent difficulties in disposing of or redeveloping the asset underscore the challenges that state-owned entities like PIA face in managing legacy properties that may no longer align with modern business objectives.
Critics have also weighed in on the issue, pointing to past controversies during the Trump administration. At that time, some officials questioned the use of US taxpayer funds to house asylum seekers in a facility owned by a foreign state-owned enterprise. These criticisms have added another layer of complexity to the discussions about the future of the Roosevelt Hotel and its role in New York’s immigration system.
As the closure of the asylum centre looms, PIA is left to grapple with the financial implications of losing a critical source of hard currency. The airline will need to explore alternative revenue streams and adjust its financial strategies to offset the anticipated shortfall. Meanwhile, the broader debate over the privatization and management of state assets continues to simmer in Pakistan, with the Roosevelt Hotel remaining a focal point of both domestic and international scrutiny.
The coming months will be crucial for PIA as it navigates these challenges, seeking to stabilize its financial position while reassessing its long-term asset management strategies in a rapidly evolving economic landscape.
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Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com