PIA losses soar to Rs154bn

RECORDER REPORT

ISLAMABAD: Pakistan International Airlines (PIA) total losses have touched Rs154 billion mark - Rs70 billion in local currency and over $885 million in foreign currency. This was revealed by the management of PIA here on Tuesday during a meeting of National Assembly Standing Committee on Finance held with Sohail Mansoor in the chair.

Members of the committee said that PIA management had succumbed to political pressure for operating flights on non-viable routes was consequently facing huge losses, etc. Finance Ministry stated that the management of PIA was lacking focus and their marketing policies were totally flawed. The government, Director General Debt Finance Division, Masroor Qureshi said that the government was throwing good money after bad.

He said that a non-serious attitude of PIA management was responsible for the crippling financial condition of the organization because they had turned a deaf ear to frequent requests of Finance Ministry during the last four years to bring everything in black and white before the Cabinet Committee on Restructuring (CCoR).

However, Deputy Managing Director of PIA insisted that “we are very serious” but was unable to hold out a guarantee that the procurement system of national flag carrier would be transparent. He said that guidance from Transparency International Pakistan (TIP) was being sought in all procurements to make them transparent and a Memorandum of Understanding (MoU) had already been signed. The PIA’s total debt, including fleet and non-fleet, peaked to Rs152 billion with annual debt servicing of Rs11.2 billion. The exchange loss added Rs 6.1 billion to the loan, the official informed the meeting.

Briefing the committee, Deputy Managing Director of PIA termed the aging fleet, volatile fuel prices, exchange loss, interest on non-fleet loans and aviation policies responsible for the losses. He further informed the committee that PIA had paid Rs59 billion to Gulf Airlines under the aviation policies. The Committee was told by the Chief Financial Officer (CFC) PIA that the number of employees of flag carrier was around 18000 and each one from them was being paid a minimum Rs.100,000 monthly, which cost 16% of the budget. The meeting was informed that the human resource rationalization plan would result in cost reduction of approximately Rs.3.8 billion over a period of 5 years. 

The DG Debt said that the business plan of the PIA had become obsolete and required improvement. He proposed that PIA should setup a strategic business unit, and the said unit should make separation of noncore business activities from airline business through speedex, flight kitchen and ground handling services. The chair and members of the committee also expressed concern over the incidence of corruption, especially in the procurement of different parts of PIA aircraft. The Standing Committee remarked that presentation by the PIA was completely unstructured and there was no clarity and decided to convene another meeting next month on the same agenda and directed Secretary Defense and MD PIA to attend the meeting. The Committee had recommended that details of the recruitment made in last five years could be furnished to the Standing Committee.

The meeting was attended by Nighat Perveen Mir, Kashmala Tariq, Rashid Godil, Bushra Gohar, Dr. Nafisa Shah, Ms. Shahnaz Wazir Ali, Khalida Mansoor, Riaz Fatyana and Aftab Shaban Mirani.