Business plan a must to reduce over Rs 70 billion loss of PIA: National Assembly defence panel says...

A comprehensive 'Business Plan' is imperative to reduce over Rs 70 billion cumulative loss of Pakistan International Airlines (PIA) along with debt servicing of more than Rs 8.5 billion, said Begum Ishrat Ashraf, convenor, sub-committee of National Assembly Standing Committee on Defence here on Friday.
The plan envisages purchase of new aircraft with all modern facilities to attract more passengers, which will add to revenue and the old aircraft will be grounded, she said while addressing a press conference at PIA Headquarters with other members of the sub-committee.
Managing Director of the PIA, Ijaz Haroon was also present. She said the Parliamentary Committee on Defence will urge the State Bank to provide credit to PIA on low mark-up for purchasing new aircraft. The cumulative loss of Rs 70 billion is hindering the growth of the airline and the issue was taken up by the standing committee, she said, adding that the core issue is to bring down cumulative loss for which a comprehensive plan would be devised.
One of the major problems of the airline is debt servicing, which is eating up its liquidity, she added. Begum Ishrat, MNA from PML-N held Shaukat Aziz government responsible for the worsening financial condition of PIA, saying that the wrong policies of the previous regime caused immense loss to the national flag carrier. "Shaukat Aziz, an official of Citibank got loan for PIA on much higher interest rate of 7 percent, whereas many other banks were offering it loan on one to two per cent mark-up," she said.
"The high interest rate has overburdened PIA," she said, adding that the standing committee has sought a report on the loan issue which will be discussed in the next meeting."
Another problem PIA is faced with is overstaffing, which will be addressed in the 'Business Plan' without job cuts, she said. The government is planning to restrict new foreign entrants in Pakistan, so that PIA could handle maximum passenger load from Pakistan for generating more revenue. "Foreign airlines which are presently operating will not be disturbed but no new airline will be allowed," she said.
Speaking on the occasion, Ijaz Haroon, MD PIA informed media that PIA's revenue could be increased by cutting expenditures. "For revenue generation, PIA did a lot and in 2008 its revenue increased by 28 percent whereas in 2009 by 24 percent, while in first quarter of current year it has gone up by 24 percent", he said, adding that with cost cutting strategy all the supply agreements are being revised to bring down the spending.
Haroon informed media that PIA has not received a single penny from the government as grant or aid. It took loans from banks to meet the financial losses. Debt due to these loans has reached Rs 8.5 billion, he added. Haroon dispelled the impression of overstaffing, saying that as compared to other airlines PIA is not overstaffed, but the main reason of loss are other than this factor.