PIA hopes to fly on bailout wings
National carrier expects settlement of long-term liabilities.
The national airline has vowed to improve its product offer by adding facilities like Wifi, and phone service to increase customer satisfaction. PHOTO: FILE
KARACHI:
The Pakistan International Airlines (PIA) expects the government to use the upcoming budget to settle its long-term liabilities once and for all in a bid to help revive the ailing carrier, a top official told The Express Tribune.
Islamabad also has the option of taking over the PIA-owned Roosevelt Hotel in New York and Scribe Hotel in Paris against settlement of the airline’s loans, said Junaid Yunus, the managing director.
“I hope, I really hope that the government gives us something,” he said, talking about the prospects of the airline getting a bailout.
“Everyone has observed the keen interest that Prime Minister Nawaz Sharif has been taking in PIA. He has his eyes on everything - from the bigger problems to the interior of aircraft.”
But any bailout appears improbable since the government is working under strict International Monetary Fund’s conditions to cut its expenses, especially expenditure on public sector enterprises.
Nevertheless, Yunus says restructuring the loans, which exceed Rs300 billion, is imperative to pull out the airline from its financial troubles. “All the debt is having a snowball effect. We borrow more to settle past loans every year. It’s a terrible trap.”
He said the suggestion to use the airline’s real-estate property was his own. “I personally think some sort of arrangement can be worked out. Maybe institutions like EOBI (Employees Old Age Benefit Institution) can be used to finance such a deal.”
PIA pays billions of rupees every year in interest payments, shrinking its limited margins. The loans also require seeking government guarantees as banks are reluctant to lend the airline on basis of its balance sheet, which carries a negative asset base.
However, Yunus is hopeful of a turnaround and pointed at the stunning improvement in finances during the first (January-March 2014) quarter, which saw the airline cutting its net losses by 77%.
“We have improved performance, timing, operations, and schedule just by inducting four aircraft on wet lease. You can imagine what we can achieve if we get the 12 dry lease aircraft on time,” he said.
Tenure for the four Airbus 320s and Boeing 737-800 aircraft, which were wet-leased in December 2013, ended this week. The airline is looking forward to include two A-320s on a much longer dry-lease over the next few weeks.
But PIA still requires government support to have the desired number of at least 10 planes, which it sees are needed to claw back the passenger traffic it has lost in the last few years.
“The last few months have been good for us. Our planes have flown jam-packed,” said Yunus, adding that the airline was strictly following the policy of carrying out detailed studies of PIA’s routes.
The airline’s management is considering adding Los Angeles as an international destination on its network, Yunus said.
New look for the 310s
PIA has recently added 12 club seats each of its six A-310 aircraft. “We were seeing a demand for luxury on certain routes. So we have included these leather seats. Carpeting and other things are also being changed.”
The national airline has vowed to improve its product offer by adding facilities like Wifi, and phone service to gain customer satisfaction.
Published in The Express Tribune, May 31st, 2014.
The Pakistan International Airlines (PIA) expects the government to use the upcoming budget to settle its long-term liabilities once and for all in a bid to help revive the ailing carrier, a top official told The Express Tribune.
Islamabad also has the option of taking over the PIA-owned Roosevelt Hotel in New York and Scribe Hotel in Paris against settlement of the airline’s loans, said Junaid Yunus, the managing director.
“I hope, I really hope that the government gives us something,” he said, talking about the prospects of the airline getting a bailout.
“Everyone has observed the keen interest that Prime Minister Nawaz Sharif has been taking in PIA. He has his eyes on everything - from the bigger problems to the interior of aircraft.”
But any bailout appears improbable since the government is working under strict International Monetary Fund’s conditions to cut its expenses, especially expenditure on public sector enterprises.
Nevertheless, Yunus says restructuring the loans, which exceed Rs300 billion, is imperative to pull out the airline from its financial troubles. “All the debt is having a snowball effect. We borrow more to settle past loans every year. It’s a terrible trap.”
He said the suggestion to use the airline’s real-estate property was his own. “I personally think some sort of arrangement can be worked out. Maybe institutions like EOBI (Employees Old Age Benefit Institution) can be used to finance such a deal.”
PIA pays billions of rupees every year in interest payments, shrinking its limited margins. The loans also require seeking government guarantees as banks are reluctant to lend the airline on basis of its balance sheet, which carries a negative asset base.
However, Yunus is hopeful of a turnaround and pointed at the stunning improvement in finances during the first (January-March 2014) quarter, which saw the airline cutting its net losses by 77%.
“We have improved performance, timing, operations, and schedule just by inducting four aircraft on wet lease. You can imagine what we can achieve if we get the 12 dry lease aircraft on time,” he said.
Tenure for the four Airbus 320s and Boeing 737-800 aircraft, which were wet-leased in December 2013, ended this week. The airline is looking forward to include two A-320s on a much longer dry-lease over the next few weeks.
But PIA still requires government support to have the desired number of at least 10 planes, which it sees are needed to claw back the passenger traffic it has lost in the last few years.
“The last few months have been good for us. Our planes have flown jam-packed,” said Yunus, adding that the airline was strictly following the policy of carrying out detailed studies of PIA’s routes.
The airline’s management is considering adding Los Angeles as an international destination on its network, Yunus said.
New look for the 310s
PIA has recently added 12 club seats each of its six A-310 aircraft. “We were seeing a demand for luxury on certain routes. So we have included these leather seats. Carpeting and other things are also being changed.”
The national airline has vowed to improve its product offer by adding facilities like Wifi, and phone service to gain customer satisfaction.
Published in The Express Tribune, May 31st, 2014.