Restructuring plan: Gilani rejects PIA’s ‘Business Plan’

Gilani says the national flag carrier will have to overcome its deficits on its own.

ISLAMABAD:

Prime Minister Yousaf Raza Gilani rejected on Thursday a ‘Business Plan’ proposed by the Pakistan International Airlines (PIA), asking it to be reviewed to make the national flag carrier more efficient and profitable.

Presiding over a meeting held at the PM house, Gilani said that PIA is a commercial entity and will have to overcome its deficits.

The premier directed the Secretary Committee to review the plan and formulate final recommendations for submission to the Cabinet Committee on Restructuring. Another meeting, in this regard, has been scheduled for the next week.

PM Gilani said that being a commercial entity, an organisation like PIA had to work out a strategy to overcome the difficulties it faces and make up for its losses.

Recently, PIA tabled a strategic restructuring plan in the Cabinet Committee on Restructuring of loss-making entities.

The plan promises to reach break-even in 2013. However, to achieve that it seeks an amount of Rs60 billion from the finance ministry, including restructuring Rs32 billion worth of debt and a cash injection of Rs28 billion.

The airline further wants Rs19.6 billion worth of its corporate bonds rolled over on deferred interest payments for five years, in addition to a rollover of about Rs12.6 billion in bank loans. It further wishes to get 39 aircraft on lease to expand its fleet.

The PIA will get 10 A321 aircraft and 10 A320 aircraft in 2012. In 2013, it will acquire as many as four ATR-72 and five 777-300ER aircraft, while it will get six A321 planes in 2014.

Last year, the entity suffered additional losses of Rs20.8 billion. It has already grounded 13 aircraft and continues to face problems in arranging fuel for its overseas flights due to its inability to clear arrears.

Thursday’s  meeting was attended by Finance Minister Dr Abdul Hafeez Sheikh, Defence Minister Ch Ahmad Mukhtar, finance, cabinet, establishment and defence secretaries, the FBR chairman, PIA managing director and senior officials of the relevant ministries.

Published in The Express Tribune, December 30^th, 2011.