Govt to go for expeditious PIA sell-off

Cash-strapped airline says it has ‘temporarily’ grounded few of its planes

ISLAMABAD:

The caretaker federal government on Thursday decided to privatise the Pakistan International Airlines (PIA) on an emergency basis as the Privatisation Commission (PC) has refused to release any more funds for the national flag carrier.

During a meeting chaired by interim Prime Minister Anwaarul Haq Kakar, the commission suggested that instead of wasting funds on the debt-ridden airline, its process of privatisation should be stepped up.
The meeting was attended by newly inducted Federal Privatisation Minister Fawad Hasan Fawad and his ministry’s secretary.

Officials of the PC and finance ministry as well as the aviation secretary also participated in the huddle.

The aviation secretary told the participants of the meeting that the restructuring of the PIA would take around eight or 10 more months, adding that a foreign consultant would be hired for this purpose.

Read more: PIA’s 35 planes not cleared by CAA yet

He added that that was why funds should be released to continue the national flag carrier’s operations.
According to sources, the interim prime minister decided to opt for the Privatisation Commission’s suggestion. He directed Fawad Hasan to speed up the privatisation process of the PIA on a war-footing basis.

Kakar added that the privatisation of the national airline as soon as possible was inevitable to provide international quality services to its passengers.

In a related development, the PIA has said it had “temporarily” grounded a few of its planes.
However, the national flag carrier added that the grounded planes would resume their operations once payments were made to the leasing companies.

As the PIA continues to grapple with serious cash flow crisis, it has reportedly been unable to pay salaries to its employees for the month of August because of the lack of issuance of funds by the federal government.

The national flag carrier is also said to be in dire straits after the freezing of its accounts by the Federal Board of Revenue (FBR).

However, the finance ministry dismissed as false and baseless media reports of the government not extending financial support to the PIA.

Also read: PIA ‘unable’ to pay August salaries to employees

Recently, it was reported that the national flag carrier had grounded several aircraft as it strived to seek funds to continue its operations for the next few months.

It was further said that the airlines’ primary functions and non-core assets were expected to be put up for sale during the period.

Last week, the aviation ministry had informed the federal government that the PIA was facing a serious financial crunch, leading to issues such as arrears with creditors, aircraft lessors, fuel suppliers, insurers, international and domestic airport operators.

As a result, the PIA has been compelled to ground five of its 13 leased aircraft, with the possibility of four more facing a similar fate, the ministry noted.

The aviation ministry maintained that Boeing and Airbus were near discontinuing the supply of spare parts by the middle of this month, and therefore, requested the government for a release of Rs23 billion, suspension of duties, taxes and service charges to domestic agencies.

On Wednesday, a Bloomberg report quoted PIA spokesperson Abdullah Khan as saying the airline had to cancel a number of domestic and international flights after grounding at least five of its Airbus A320 planes.

It further quoted him as saying that the PIA must pay at least $100 million immediately to about half a dozen leasing companies it had engaged for chartering planes, airport authorities, aircraft spares and others.

According to data compiled by Bloomberg, the PIA’s liabilities had increased to Rs743 billion or $2.5 billion, which exceeded its total assets by five times.

Separately, the Senate Standing Committee on Aviation held a meeting at Parliament House in which its chairman Senator Hidayatullah ordered action against the PIA official, who leaked information about the airline’s affairs to the media.

The committee also urged the media to play a responsible journalistic role when publishing news reports.
The Senate panel was told that that the number of PIA employees stood at 11,877 -- 765 of them regular and 183 on contract -- and their performance was being evaluated.

Speaking about overseas placements, the PIA officials said appointments were made keeping in mind the local needs and preference was given to Pakistani nationals.

The committee was also informed about the personnel posted at the same station and the European Union Aviation Safety Agency’s (EASA) advisory for flights passing over Lahore and Karachi.

The PIA officials told the Senate panel that various countries kept issuing advisories for their citizens and the EASA had issued one after the country’s media reports.

However, they added that the matter had been resolved now.