PIA privatisation a bad idea, says CEO
Cyan outlines ‘rational’ plan for revival, expansion of airline
The airline has managed to slightly improve its balance sheet as it posted 5% growth for Jan-Jun 2018. PHOTO: FILE
LAHORE:
Pakistan International Airlines (PIA) Chief Executive Officer Musharraf Rasool Cyan has discarded the option of privatising the national flag career, terming it a bad idea keeping in view the current state of affairs.
Instead, Cyan has chalked out a plan for the revival and expansion of the air carrier by flying to strategic locations and acquiring new aircraft. He will present the plan to the new government. Though Cyan’s job may come under threat when the new government takes over, he is confident he will be able to present what he calls a rational plan based on facts and figures.
“I don’t believe in PIA’s privatisation as I think it is a bad idea,” the CEO told The Express Tribune in an interview. “I know that privatisation works in certain conditions that the country lacks in general. PIA should have competition over profit-making in the market … but actually there is not,” he said.
For Cyan, there are barriers in the aviation industry and Pakistan’s market is not that competitive. “For privatising PIA, you should have a strong regulator and Pakistan has no history of having a strong regulator. Privatisation is not likely to work, since matters in PIA are not favourable,” he added. He joined PIA about 10 months ago and since then he had been trying to examine real issues and find their solutions. Now, he said, he had understood the complexity of problems and how they were linked with each other, no matter whether they were related to trade unions, overstaffing, aircraft maintenance, cash flow, marketing, staff attitude and above all politics.
“We often hear that the system does not allow us to work, but in case of PIA, external pressures exist, and not internal, which do not allow us to work,” he said while referring to political interference and mounting court stay orders.
“External pressures are sometimes good, but not in the scenario where managerial decisions cannot be taken,” he added.
At present, PIA has a fleet of 32 aircraft. On several occasions, the airline has taken months to make grounded aircraft operational due to cash flow hurdles. The CEO suggested that a component support programme should be put in place as currently PIA could not keep inventory due to liquidity problems.
“We do have this programme, but as soon as our liquidity dries up, so does the facility,” he said while pointing out that the government released money for engine repairs in May this year, which it had agreed to provide in December last year.
PIA debt hits Rs406b, running only on govt support: report
The airline has managed to slightly improve its balance sheet as it posted 5% growth for Jan-Jun 2018. From Sept 2017 to May 2018, it managed to reduce losses from Rs34.65 billion to Rs29.2 billion, a 16% fall year-on-year.
Way forward
“The government has asked us to give proposals for converting current debt into long-term debt,” he said, hoping that might help PIA get a grace period of a few years and could help to fix its cash flow problems.
By fixing the debt issue, Cyan is looking to improve PIA’s network planning. “Network planning is hardcore economic planning; PIA has software for this which was purchased in 2006, but previous managements never used it, which has now become obsolete,” he said. “We are trying to get new software to fix this problem.”
Other major step Cyan intends to take is to utilise the newly built Islamabad International Airport as the airline’s base where it may seek to capitalise on the growing international air traffic through connectivity.
“Around 65% of our air traffic comes from the north ie Lahore and Islamabad; PIA should have multiple hubs now, instead of having only one in Karachi,” the CEO suggested.
PTI’s promises include turning around PIA, PSM
“I am going to implement a very different plan that will help PIA in expanding and becoming a true airline,” he said. “I want to convert the Islamabad airport into an international hub managed by PIA since the airport has state-of-the-art international transit facilities.”
However, he is also aware that without fleet expansion and improvement in human resources, this cannot be done. “We lack trained staff in PIA; though the organisation is overstaffed, we are internally trying to build more capacity and adopt more systems,” he said.
PIA's Air Safari crashes even before take-off
In the next two years, he emphasised, PIA would have to take important decisions which included fleet expansion either through dry lease or through financing. Dialogue will be initiated with the government for fleet expansion, the type of aircraft needed and which routes or destinations should be tapped.
“Though we have initiated the process of utilising all our aircraft, in competitive markets, product matters. With old aircraft and current network, we can go up to a certain extent, but for long-term sustained profits, PIA has to expand,” Cyan stressed.
Published in The Express Tribune, July 29th, 2018.
Pakistan International Airlines (PIA) Chief Executive Officer Musharraf Rasool Cyan has discarded the option of privatising the national flag career, terming it a bad idea keeping in view the current state of affairs.
Instead, Cyan has chalked out a plan for the revival and expansion of the air carrier by flying to strategic locations and acquiring new aircraft. He will present the plan to the new government. Though Cyan’s job may come under threat when the new government takes over, he is confident he will be able to present what he calls a rational plan based on facts and figures.
“I don’t believe in PIA’s privatisation as I think it is a bad idea,” the CEO told The Express Tribune in an interview. “I know that privatisation works in certain conditions that the country lacks in general. PIA should have competition over profit-making in the market … but actually there is not,” he said.
For Cyan, there are barriers in the aviation industry and Pakistan’s market is not that competitive. “For privatising PIA, you should have a strong regulator and Pakistan has no history of having a strong regulator. Privatisation is not likely to work, since matters in PIA are not favourable,” he added. He joined PIA about 10 months ago and since then he had been trying to examine real issues and find their solutions. Now, he said, he had understood the complexity of problems and how they were linked with each other, no matter whether they were related to trade unions, overstaffing, aircraft maintenance, cash flow, marketing, staff attitude and above all politics.
“We often hear that the system does not allow us to work, but in case of PIA, external pressures exist, and not internal, which do not allow us to work,” he said while referring to political interference and mounting court stay orders.
“External pressures are sometimes good, but not in the scenario where managerial decisions cannot be taken,” he added.
At present, PIA has a fleet of 32 aircraft. On several occasions, the airline has taken months to make grounded aircraft operational due to cash flow hurdles. The CEO suggested that a component support programme should be put in place as currently PIA could not keep inventory due to liquidity problems.
“We do have this programme, but as soon as our liquidity dries up, so does the facility,” he said while pointing out that the government released money for engine repairs in May this year, which it had agreed to provide in December last year.
PIA debt hits Rs406b, running only on govt support: report
The airline has managed to slightly improve its balance sheet as it posted 5% growth for Jan-Jun 2018. From Sept 2017 to May 2018, it managed to reduce losses from Rs34.65 billion to Rs29.2 billion, a 16% fall year-on-year.
Way forward
“The government has asked us to give proposals for converting current debt into long-term debt,” he said, hoping that might help PIA get a grace period of a few years and could help to fix its cash flow problems.
By fixing the debt issue, Cyan is looking to improve PIA’s network planning. “Network planning is hardcore economic planning; PIA has software for this which was purchased in 2006, but previous managements never used it, which has now become obsolete,” he said. “We are trying to get new software to fix this problem.”
Other major step Cyan intends to take is to utilise the newly built Islamabad International Airport as the airline’s base where it may seek to capitalise on the growing international air traffic through connectivity.
“Around 65% of our air traffic comes from the north ie Lahore and Islamabad; PIA should have multiple hubs now, instead of having only one in Karachi,” the CEO suggested.
PTI’s promises include turning around PIA, PSM
“I am going to implement a very different plan that will help PIA in expanding and becoming a true airline,” he said. “I want to convert the Islamabad airport into an international hub managed by PIA since the airport has state-of-the-art international transit facilities.”
However, he is also aware that without fleet expansion and improvement in human resources, this cannot be done. “We lack trained staff in PIA; though the organisation is overstaffed, we are internally trying to build more capacity and adopt more systems,” he said.
PIA's Air Safari crashes even before take-off
In the next two years, he emphasised, PIA would have to take important decisions which included fleet expansion either through dry lease or through financing. Dialogue will be initiated with the government for fleet expansion, the type of aircraft needed and which routes or destinations should be tapped.
“Though we have initiated the process of utilising all our aircraft, in competitive markets, product matters. With old aircraft and current network, we can go up to a certain extent, but for long-term sustained profits, PIA has to expand,” Cyan stressed.
Published in The Express Tribune, July 29th, 2018.