PIA to become profitable in next few years: CEO

PIA Chief Executive Officer Air Marshal Arshad Malik on Friday maintained that the national carrier would become a profitable entity in the next few years.

“We are trying to reduce the PIA’s losses with the cooperation of the private sector,” he said while addressing a ceremony where an agreement was signed between the airline and a private bank.

The PIA CEO pointed out that the European Union Air Safety Agency (EASA) had expressed its satisfaction over the measures taken by the airline in connection with its safety management system.

“We are facing issues because of the coronavirus pandemic but the PIA will soon reach new heights,” he added.

He further said the PIA had reduced fares to provide relief to the people despite facing challenges because of Covid-19.

Last month, the government approved a plan that seeks to lay off over 3,800 regular and contractual employees of the PIA — one out of every three persons — to cut annual losses by Rs4.2 billion.

The Economic Coordination Committee (ECC) of the Cabinet approved a Rs12.87 billion Voluntary Separation Scheme (VSS) for PIA employees to be paid in two- and-a-half years’ time.

According to the Aviation Division, the laying off of 3,500 employees would result into annual saving of Rs4.2 billion and the government will recover the Rs12.9 billion VSS cost within two-and-a-half years.

During his visit to the Lahore Chamber of Commerce and Industries last month, the PIA CEO said the financial restructuring of the national carrier was well on its way and would be finalised soon.

“We do have a few options to settle the mounting debt issue of PIA,” Malik said.

“One of the options is to issue investment bonds; the other is debt-equity swap,” he said, adding, “The third option we have is that the government can take some of PIA’s assets against the loans to clear our balance sheet, which is already guaranteed by the government.”

An audit of the PIA conducted with the main objective to examine its overall performance shows that the national flag carrier will continue to burden the exchequer due to its “inefficient operations”.

In its special report examining the PIA’s economy, efficiency and effectiveness aspects through analysis of its financial statements, the Accountant General of Pakistan said the organisation was heavily dependent on debts, instead of equity and this had increased its financial risk.

The report pointed out that the PIA had a “poor liquidity position”, “improper revaluation of aircraft fleet”, “non-disposal of aircraft surplus inventory” and “excess fuel consumption”.

Its fixed assets decreased by 4.10% from roughly Rs147 billion in 2014 to Rs141 billion in 2015 whereas they were over Rs159 billion in 2013 and Rs156 billion in 2012.

Advances to employees – mainly including accountable advance (petty cash) and other suppliers – increased by 166% and 74% from Rs182 million and Rs536 million in 2014 to Rs483 million and R932 million in 2015, respectively.