ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has constituted three-member committee headed by Secretary Aviation Division for comprehensive settlement with Roosevelt Hotel Union and renting out the hotel to New York City for immigrants, well informed sources told Business Recorder.
Sharing the details, sources said that on April 28, 2023, Ministry of Aviation informed the ECC that while the process of re-opening of the Hotel was in progress, PIA-IL Management apprised that an opportunity had arisen whereby the New York City had sought utilization of the Hotel (1,025 rooms) for immigrants @ $ 200 per room per day for a period of 36 months.
As per the draft contract shared by the City, the guarantee period was’ fourteen months with four months’ notice if City intended to terminate the said contract. PIA-IL Management had given financial projections of this facility comparing it with other two options highlighting its viability which was shared with the ECC.
PIA-IL Management had further stated that Union and the City were well aware of the precarious financial position of the Hotel, and as such, were assisting Hotel in securing immigrant’s business which in turn would help the Union in seeking a financial settlement with the Hotel.
Ministry of Aviation further informed that in addition to the proposed settlement with the Union, it was anticipated that total outstanding liabilities/ one off expense of $25.7 million would be paid out of the revenues to be derived from City Contract. PIA-IL Management had also noted that serious settlement discussion with the Union was in progress.
It was further noted by the Ministry that as per recent deliberations with the Union, it appeared that the agreement with the Union could be achieved on specific terms. The estimated financial exposure of the Hotel for achieving a global settlement with the Union, as advised by Aimbridge, and subject to agreeing with the Union, appeared to be $ 56 million based on the assumption that of the total 469 union employees who were severed, 77 would be recalled, and remaining 392 employees would accept severance.
Aviation Ministry argued that since time was of extreme essence, the opportunity offered by New York City needed to be availed without wasting further time to overcome the financial challenges being faced by RHC and to avoid creation of further liability for the national exchequer.
Ministry of Aviation supported following recommendations of PIA-IL Board of Directors for consideration/ approval of ECC: (i) to execute a contract with the City to secure immigrants’ business by PIAIL/ RHC for a period of 36 months (guaranteed tenure of 18 months); (ii) a negotiating Committee be formed to negotiate settlement with the Union, and that the said Committee to be fully empowered/ authorized to execute a settlement agreement with the Union; (iii) in the event the settlement with the Union is achieved, and the City decides to terminate the contract after 14 months with a notice period of 4 months, it is estimated that funding for the Union’s remaining settlement amount of S 27.5 million to be underwritten by the Government. Payment to the Union is envisaged over a period of 3 years on weekly basis. The payment plan should be made part of the final agreement to be entered into with the Union, and shall apply to the remainder payment, if any, due to loss of business with the City; (iv) in view of the extreme financial constraints, PIAIL /RHC be permitted to utilize the funds of $ 1.145 million from the available balance as part of GoP grant to commence reopening works at the Hotel. PIA-IL’s dividend earning from Hotel Scribe pending the compliance with certain tax related formalities are held up in Netherlands. Upon the receipt of said funds, GoP grant funds of $ 1.145 million would be replenished forthwith to the account it was drawn from.
The ECC approved the summary with the remarks that the demand of the union was on the much higher side. The ECC constituted a fully empowered Negotiation Committee under the chairmanship of Secretary, Ministry of Aviation comprising CEO, PIA Investment, Atif Bajwa, Member PIAIL’S Board and Dr Najeeb Samie, Member PIAIL’s Board to negotiate a comprehensive settlement with the union on both financial and non-financial aspects.
The Committee also tasked to negotiate with New York City on the proposed contract to secure immigrants’ business on the best possible terms. The Committee may co-opt expert/ official deemed appropriate. A report shall be submitted therein for consideration of the ECC.
Copyright Business Recorder, 2023
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