According to new management this revival plan is
expected to reverse the situation
From Shamim Ahmed Rizvi,
Islamabad
June 18 - 24, 2001
The cash-starved government of Pakistan, under
sheer force of circumstances, had to approve, last week, a rescue
package of financial assistance and administrative measures for PIA to
salvage the national flag carrier from the acute financial crisis and
keep it flying. The package authorized the PIA to raise Rs. 20 billion
through assistance from the Ministry of Finance and has all its unions
and associations banned.
The package was announced after the much awaited
presentation to the Chief Executive General Pervez Musharraf in
Islamabad by the new management of the airline headed by Managing
Director Mr. Ahmed Saeed. On humanitarian considerations, however, the
CE did not agree with the suggestion of retrenching 4000 employees.
Under the rescue package, PIA would work with the Ministry of Finance
to raise Rs. 20 billion to meet its accumulative financial obligations
and maintain its operation at home and abroad. The Ministry of Finance
was earlier reported to be against providing hard cash to the airline
but had to backtrack on Gen. Musharraf prevailing who appeared
impressed by the presentation of new management of the PIA headed by a
successful businessman.
According to new management this revival plan is
expected to reverse a situation where airline was loosing heavily
(with a total loss of Rs. 18 billion suffered up to April during the
current financial year) to a position of profitability. It was brought
out in the briefing that without the rescue package it will not be
possible for the PIA to operate normally. It was hoped that with
normal operation on restructured routes, the airline will not only
eliminate the losses but would earn a profit of over Rs. 2 billion
during the next financial year. The PIA management optimistically
hoped to enhance its profitability to Rs. 4 billion by the year 2004.
While agreeing to provide the rescue package the Chief Executive
emphasized the need to turn the organization into a disciplined,
effective and profit making organization.
It may be recalled that a number of strategies had
been worked out to halt the unabated degeneration that had steeped
into PIA during the recent years of its comedown, despite various
shifts and changes, including overhaul of the top management. However,
none of these proved of any real avail in stemming the rot, mostly
because what has come to be identified as the result of interference
from the changing governments as also aggravated by the waywardness of
the union leadership.
The new administration's approach, evidently based
on this premise, has sought, among other measures, restoration of the
amendment to PIAC Act in 1984, aimed at the suspension of the
activities of the trade unions and associations. Together with
ensuring return of discipline in labour-management relations, thereby,
it hopes to contribute also to improvement in its efficiency. However,
this has to be accompanied by an effective check on domineering from
outside the airline's own setup, which seems to have been taken for
the granted.
In so far as the present government is concerned,
one may have little to fear on this count. But now that restoration of
the democratic order, in whatever form, is a foregone conclusion in
view the government's commitment to abide by the Supreme Court's
timeframe, the threat of return to old malpractices can hardly be
overlooked. Apart from the suspension of trade unions, the extraneous
influences on the airline's working do not appear, therefore, to have
been adequately covered by the new plan.
The gross losses of the airline up to end December
are stated to have risen to Rs. 18 billion. With the reported addition
of another Rs. 2 billion by mid-year 2001, it would swell to the
figure asked for the execution of the proposed plan. Viewed in the
perspective of the extent of the average losses, the rescue fund
should leave not much to finance efforts for efficiency either.
Morever, despite all the promise of a revolutionary change in the
airline's profitability, it may not be possible to raise funds for the
estimated cost, in the absence firm assurances of repayment. The
Finance Ministry will be required to provide, in the first instance,
something like Rs. 8 to 10 billion in interest-free loan, payable from
the sale of Hotel Roosevelt in New York.
The new PIA Managing Director Ahmed Saeed, who is
himself an entrepreneur of high order, seems to do business. He truly
contemplates to put the airlines on the right track and putting an end
to its further downslide. He impressed upon the CE for funds which he
requires to put into practice his plans and schemes to make the
airlines a world class organization. Speaking after the meeting, Ahmed
Saeed remarked that the funds would undoubtedly be involved in
negotiations and any unreasonable agreements between the previous
management and the unions would, however, be revoked. Let us hope he
is able to deliver.
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