In a deal unheard of in aviation history, Pakistan's national airline has pledged its entire fleet in the name of a "fake off-shore company" to acquire eight Boeing-777 aircraft, media reports said on Sunday.

The Pakistan International Airlines made the deal following a directive by the US Export-Import Bank, US-based South Asia Tribune Web magazine reported.

To comply with the Exim Bank condition, "PIA has registered its entire fleet in the name of a fake off-shore company -- Fly PIA Limited -- in Cayman Islands… to pledge its assets for use as collateral to buy three B777-2ER to be delivered in the first quarter of 2004", it reported.

The carrier at the moment has 44 aircraft, including eight Airbus 300-B4, six B747-300, four B747-200, six A310 and seven B737-300.

The registration of these aircraft in the Cayman Island-based company puts a question mark on their operations in the Pakistani skies as the PIA can "no longer claim to be the national flag carrier", the magazine said.

As per an agreement between the PIA and US Exim Bank with Boeing last year, the airline is to purchase eight B777 aircraft at an approximate cost of $1.3 billion with 85 per cent of Exim Bank guarantee.

"In case of a default, the lending bank could sell the PIA fleet in the open market to recover its loans. Moreover, the bank could also recall or seize the new aircraft to recover its money," the magazine reported.

It quoted experts as saying the entire deal was "speculative" and the pledging of the fleet a "highly irresponsible act".

After being de-registered in Pakistan following their registration in Cayman Islands, the Pakistani defence ministry "strangely enough forced the Pakistani civil aviation authority to re-register all the aircraft in Pakistan as well".

Now the entire PIA fleet has "double registration -- first of its kind in the country's aviation history".

The magazine also reported that despite the high price, several expensive components of the aircraft were not included in the main agreements. "This means PIA will have to pay more for items like passenger seats in the aircraft," it said.