PIA IN DEBT TRAP: SEEKS GOVT SUPPORT FOR RESCHEDULING
Mar 8 - 14, 2010
Heavy debt servicing on the back of piled up loans running over Rs65 billion, has paralyzed PIA's financial and operational health. Therefore, the national flag carrier hectically is pursuing the government for support in rescheduling its stuck loans to have a breathing space.
According to knowledgeable sources, a meeting of the subcommittee of the standing committee of the national assembly expressed serious concerns over the financial position of the airline and the losses piled up to the tune of Rs65 billion. However the visiting committee members deliberated that the root cause of these losses were the loans acquired by PIA during the tenure of previous government between 2003 and 2007. The meeting was held last week at the head office of PIA to examine the rescheduling of loans, and discussed ways to provide financial supports to the national airline.
Begum Ishrat Ashraf, convener of the subcommittee was chairing the meeting that was attended among others by MNAs Syed Haider Ali Shah, Captain (Retd) Rai Mujtaba Khural, Dr. Talat Mahesar, Sardar Talib Hussain Nakai, and managing director PIA, Captain Muhammad Aijaz Haroon.
After detailed deliberations, the subcommittee assured that they would fully support the rescheduling of loans and recommend to the government to support improvement in the financial position of PIA.
The committee directed the corporation's management to submit a 5-year business plan of the airline for improving its operational earnings, in case the government agrees to address the previous loans.
The members of the subcommittee agreed to take up and address all genuine issues of PIA both in the parliament and with the government.
It may be mentioned that PIA's board of directors has already approved the corporate budget for the year 2010 with a revenue target of Rs.114 billion which is more than 20 percent higher as compared to the un-audited revenue of 2009.
In order to enhance the flow of revenue new/additional flights, real time Pax Revenue Management System, Pakistan Remittance Initiative (PRI), Cargo Revenue Management System and monitoring of Route Profitability are being focused as a part of the strategies.
Meanwhile, the board was given a brief on the cost cutting measures including debt swap, fuel price hedging, review of contracts, aeronautical charges and, ATR fleet economics.
The board also looked into operational performance of PIA which inter alia covers flight regularity, flight punctuality, and route performance. The directors also discussed different measures taken by the management to initiate strategic business units (SBUs) in the areas of maintenance, repair & overhaul (MRO), Speedex, and PIA Training Center.
Meanwhile Salim Siyani, deputy managing director (DMD) PIA, proposed Strategic Think-Tank Review Board comprising leaders of south Asian airline industry, civil aviation, tourism and support groups to develop and save the regional airlines from the decline after the worst global recession since 1930s.
Addressing the delegates of the two-day, 5th South Asia Regional Initiative (SARI) Conference organized under the aegis of Pakistan civil aviation authority at Jinnah International Airport, Karachi DMD PIA emphasized that the think-tank should study civil aviation policies and benchmark and align the regional aviation industry with the world's major regulatory agencies i.e. European aviation safety agency (EASA), and federal aviation administration (FAA) of the United States.
Salim Siyani said that civil aviation authority played a vital role in the development of aviation industry. The policies and procedures of civil aviation authority have a direct bearing on the operational as well as commercial aspects of the airlines. "We need to have a think tank review board comprising of leaders and legends such as the ones present at the seminar." The record setting growth of neighboring countries will reach such a level in 5 years that strategic partnership is vital for our mutual growth and prosperity in this vital industry.
There exists a demand and supply gap of aircraft maintenance, repair and overhaul business. Middle East has demand of US$ 2.3 billion and supply of $0.9 billion resulting in a gap of $1.2 billion. Similarly SAARC countries have a demand of $2billion and supply of $0.7 billion resulting in a gap of $ 1.3 billion.