Future acquisitions: PIA presents case for leasing 10 planes before ECC nod

Airline is seeking to acquire six A-320 and four A-319 for six years.

KARACHI:

Pakistan International Airlines (PIA) has emphasised that it needs to lease 10 aircraft to prop up revenues and cut financial loss, ahead of a crucial cabinet meeting set to approve the plan.

PIA’s board of directors has already approved acquisition of six Airbus-320 and four A-319 aircraft on dry lease from General Electric Capital Leasing Services. The aircraft will start joining the fleet for six years from April 2014.

“This is part of government’s initiative to revive the airline,” said Syed Muhammad Ali Gardezi, the aviation secretary who is also the acting chairman of PIA, while addressing a press conference at the PIA head office on Friday. “We have to go to the Economic Coordination Committee (ECC) for the money.”

In coming days, PIA will present the proposal to lease the aircraft before the ECC, which has already released Rs12.7 billion out of a Rs16 billion package announced for the airline. The remaining Rs3.3 billion was earmarked for the new generation aircraft.

These 10 aircraft are in addition to the four, which PIA has recently inducted on wet lease.

Gardezi, who was flanked by Managing Director Captain Junaid Yunus, said high fuel cost has been eating into revenues because PIA’s existing fleet largely includes older aircraft.

“We are targeting to take monthly revenues to Rs12-13 billion from current Rs7.7 billion,” he said.

PIA is on track to end one of the worst periods in its history. It posted a loss of Rs31.9 billion in the nine months to September 2013. It also marked a 12% slide in revenues as the airline could not fly required number of planes.

Managing Director Yunus reiterated that his management has been trying to lease the planes for months. “That is the reason we had to bring in aircraft on wet lease to meet immediate shortage during next quarter.”

PIA should have acquired fuel-efficient smaller planes by now, he said. “It’s all about vision. We have to plan not for next year but for 10 to 15 years. Unfortunately, we have been late. There will be no delivery of new A-320s until 2020,” he added. The aircraft joining the PIA fleet on dry lease are six years old.

The bosses were all praise for the Way Forward Committee, a group of former and serving employees that also includes representatives from labour unions. The committee has been suggesting to the management how to cut operational cost.

“So far, there has been a saving of Rs43.5 million on fuel, which could go up to Rs5 billion once the plan is implemented completely,” said Yunus. “Around Rs168 million has been saved in catering cost.”

Perhaps the biggest cut in expenditure came from the efficient management of crew layovers as the airline slashed bill payments for 7,700 stopovers over the past few months. “This has saved Rs221 million,” Yunus said.

Gardezi’s silence

It was unusually embarrassing for the aviation secretary when a journalist pointed out that Gardezi’s relatives and unqualified employees are being promoted under his tenure.

Captain Syed Hamid Abbas Gardezi, who looked after airport services, has been made Director Safety Management without any prior experience. As he was elevated, former director Captain Adnan Haris was demoted to the post of general manager.

PIA is even mulling over changing its rules to accommodate another of secretary’s relative, Saqlain Gardezi, who doesn’t want to move out of Lahore, but being a Group 9 officer he has to report to the head office in Karachi.

First Officer Chakkar Ali Shah, an active Pakistan Airlines Pilots Association (Palpa) member, has been given the complicated office of general manager fuel and also made brand manager. He is only an intermediate, something which Yunus confirmed during the press conference.

Gardezi remained silent and passed on the queries to Yunus who said all these officials are capable.

Published in The Express Tribune, November 30^th, 2013.

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