ISLAMABAD: The Pakistan International Airlines (PIA) is unable to retire its debt burden of more than Rs500 billion and the federal cabinet, which is scheduled to meet on Tuesday, is likely to take a decision in this very regard.
According to well-informed sources, PIA Chief Executive Officer Air Marshal Arshad Mahmood Malik, will brief the federal cabinet on Tuesday about the restructuring reforms of PIA ostensibly to make it self-sustainable without calling on the government for financial bail-out repeatedly. They said that PIA CEO will highlight the financial woes of the national flag-carrier. They also added that the PIA chief will tell the cabinet that even with operational profits it will not let the entity come out of a financial quagmire. The burden of debt servicing and related exchange loss of PIA is unsustainable, said sources.
The sources added that PIA chief, in its briefing, will float certain options before the government to choose from in order to make PIA self-sustainable.
Furthermore, the PIA head will ask the government to take over Pakistan International Airlines Investment Limited (PIAIL) and the government can settle financial institutions and other government organisations (e.g Civil Aviation Authority) through some options, including immediate “on-time” upfront payment, issuance of Pakistan Investment Bonds (PIB) at market rate, payment as per agreed amortization schedule or any other option to be decided by the Ministry of Finance.
Sources said that PIA head will also brief the cabinet about restructuring measures regarding its foodservice division (FSD), technical ground service (TGS), base management of engineering department, revenue enhancement strategies, human resources restructuring, financial restructuring, and restructuring measures pertain to Precision Engineering Complex (PEC).
It is also learnt that PIA management has been evaluating the possibility of management contract of food services at Karachi and Islamabad. While this will not generate much in terms of cost saving, it will definitely improve product quality and customer satisfaction. Similarly, the management of PIA has been evaluating the possibility of operating and management contract for technical ground service (TGS).
Likewise, PIA management is evaluating different options to get out of the courier business which was launched by PIA in 2003. It has been considering outsourcing or partnering options for Speedex.
Moreover, the airline is tackling revenue enhancement strategies, route rationalisation, product improvement, yield enhancement, enhanced focus on corporate business, network optimisation, ancillary revenue, codeshare of the alliance to expand the network, revamping of web business portal and offering special packages for online users and reduction in distribution cost by implementing HITIT portal plus.
In order to bring the number of employees in line with requirements of the organisation and achieve right-sizing of the human resource for improvement in the company’s financial position and productivity, PIACL is in the process of announcing Voluntary Separation Scheme (VSS-2020) to all eligible employees. The proposal has been submitted to the Aviation Division for onward submission and approval by the federal cabinet’s economic coordination committee (ECC), said sources.
An official of PIA, on condition not to be named, said that total debt of PIA accumulated till 2019 was of Rs464 billion while the exchange rate loss was Rs47 billion.
It is pertinent to mention here that the federal cabinet meeting is scheduled on Tuesday to take up a 15-point agenda including a presentation regarding year on year profit/loss incurred by PIACL.
