ECC also approves providing sovereign guarantees for obtaining $150 million loan for repairing Boeing 777 aircraft.
The decision was taken by Economic Coordination Committee of the Cabinet, headed by Finance Minister Ishaq Dar. However, the ECC turned down the PIA’s request for another five aircraft that the national flag carrier also wanted to obtain on lease.
It also approved providing sovereign guarantees for obtaining $150 million loan for repairing Boeing 777 aircraft and extended the existing guarantees of Rs33.5 billion till end of current financial year 2013-14.
The PIA management had shortlisted ten A319/320 aircraft on their combined score tabulated on their financial and technical parameters. According to a handout of the Ministry of Finance the remaining five aircrafts were rejected because of their low combined score.
The PIA had emphasized that it needed at least 10 aircraft to prop up revenues and cut financial loss. The PIA’s board of directors had approved acquisition of six Airbus-320 and four A-319 aircraft on dry lease.
According to third quarter financial report of the PIA, the entity’s liabilities have increased to Rs267.8 billion by end-September. Minister of State for Privatization, Khurram Dastgir Khan has recently said that the corporation was causing Rs72 billion per annum losses.
The Secretary Aviation Imran Ali Gardazi claimed in front of the ECC that last month the PIA management had reduced losses from Rs3.3 billion per month to Rs1.5 billion.
The ECC directed that the lease period of the present four aircraft hired on wet lease may be extended so that a pool of at least ten aircraft could be maintained. The ECC also authorized PIA to initiate bidding for tender of additional five aircraft which may be inducted by June 15, 2014.
The Finance Minister observed that the finalization of this lease by PIA will not only rehabilitate its international credibility but also improve its image.
The Secretary Aviation informed ECC that after approval of Rs16 billion bailout package in July this year PIA was able to add six additional aircrafts which raised the number of operational aircrafts from 20 to 26. This, he said had increased schedule integrity and no complaints of delay was reported during Hajj operations which was smooth after many years.
The ECC approved providing guarantees to Exim Bank of USA and Islamic Corporation of Insurance and Export Credit (ICIEC) for providing $150 million financing for servicing and repairs of nine Boeing 777 aircraft. However, the approval was subject to clearance of financing terms by the Finance Division.
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There may be a conspiracy by US, India and Israel to make PIA loose money.
@New Team: You know nothing. If Imran had been in power, Asad Umar would transform the older planes to 787s overnight w/o any cost. PTI Troll Wing would rebuild older planes and convert engines to run on hot air. Problem solved.
@nomi: Have you not seen that Pakistan's rating has significantly improved under the current government - even corruption has been ranked as being much less according to Transparency International. I have more faith in the current government fixing the national airline carrier than the past government or the previous dictator.
Same corrupt practices to favour a few..........old story. Nawaz Sharifs claim of privatisation is just a load of nonsense.
@Kiran Muzammil:
Why middle eastern investor? Privatization in Pakistan won't work - govt want to transfer operations to new management but want maintain 74% ownership which gives them the leverage to fire/hire and otherwise mismanage the business and load it with cronies like they have always done. BTW - who wants to buy a chronic looser who has a terrible image with it's customers and the fleet is old, fully leveraged and often not capable of flying? Your better off starting from scratch.
Look I think lets give these guys 9 months. The new Board and Management doesn't have crooks and they are trying to make PIA profitable by: 1. Buying more fuel efficient planes so that each flight is actually profitable 2. Repairing old planes so revenue can be collected from out of commission planes and improve the security
The Board cannot do anything about the overstaffing. There are 10 unions operating at PIA and firings will just not happen
People buy profitable businesses not a bottomless bucket. PIA has been eaten up by its present and past managements. Most airlines make money by business and upper class travelers. In PIA most front seats are kept for freeloaders who happen to be the current or past employs and their families. Even PIA staff friends travel in upper class after buying a cut rate coach fare. Before privatizing we have to cut down loses and make it attractive for the buyers. One easy way is to make the booking (especially International coach and business) available on the Net. However, unlike most profitable airlines PIA bookings are only through their “travel agents”. By booking on the net most people would be able to buy the available seats in all classes without losing monies to agents.
@Kiran Muzammil: Why sell it or privatize it? Has it been made cost efficient? Has the un-necessaey staff being let go? There could be so many other areas for improvement that could be considered to turn around this organization rather than just bent on selling or privatizing it?
The PML-N Government is successfully turning around PIA, a national asset badly raped by PPP through political interferences, inductions of cronies, extravagant perks to Faisal Raza Abdi (PPP's Senator stayed for years at Marriott Hotel Islamabad on PIA's expense), Sayani (appointed by PPP at US$50,000) and above all mega corruption. This rape was even worse than Musharraf-appointed Chairman Tariq Kirmani who gave a huge contract for changing the scape of airplane's tails to his daughter's advertising firm. Long Live Pakistan!
%age %age %age.......
I hope you guys understand, what I mean.
@unbelievable - that current got. Kept the airline alive and tried to save it from going down but in most inefficient way :). Every step of govt. is calculated to highlight their so called achievement than providing reliable relief to the nation.
@unbelievable - that current got. Kept the airline alive and tried to save it from going down but in most inefficient way :). Every step of govt. is calculated to highlight their so called achievement than providing reliable relief to the nation.
Why not just privatize PIA, preferably through a Middle Eastern investor, and purchase new and top of the line A380's for international routes, making PIA a world class international airline. Only a foreign investor will have the guts to sack the thousands of incompetent appointees on the PIA payroll, as all governments are too corrupt and weak to take the neccesary action to save PIA. By leasing aircraft, PIA is paying a huge amount when they cannot even make a profit either way. PIA should be sold, all surplus and incompetent employees fired, and a new international management team should take over the airline.
So what have the people of Pakistan gained by this? If PIA closed down the demand would be met by foreign airlines which would operate on time, better service, and probably lower cost. Those airlines purchased the fuel efficient aircraft long ago and don't have the excess staff and lousy attitude ingrained in PIA. The govt shouldn't be in the airline business - they don't seem to operate anything well.