National air-carrier confident of turnaround

PIA spokesperson Sultan Hassan says operational profits show that PIA can become self-reliant.

ISLAMABAD:
Pakistan International Airlines (PIA) spokesperson Sultan Hassan has said that operational profits show that PIA can become self-reliant.

“We want to reform the airline. If the government helps us by taking on our previous losses and loans so that we can invest capital, we will be able to revamp the company for the future,” said Hassan.

Defending the company against long-standing allegations of graft and staffing problems, he blamed “bad policies of the past” for accumulated losses of Rs80 billion and liabilities of Rs144 billion. But he insisted that the airline was capable of future success.

In a five-year survival plan submitted to the government, PIA is asking the government to write off losses of $1.7 billion to save it from looming bankruptcy. The airline has promised to make cutbacks and better its fleet if the treasury agrees to cancel its debt and pay off other creditors.

But, the burden would be a massive undertaking for the government, analysts say.


“I don’t think it is viable,” said an international finance official in Islamabad on condition of anonymity. “The Pakistani economy is already weak, the government is under billions of dollars in debt – if they accept PIA’s request to pay off their loans, it would be an additional burden.”

A former financial adviser to the government, Ashfaq Hassan, said that privatisation was the only long-term solution for the airline, which has failed to turn a net profit since 2004 according to its last annual report.

“This is a plan that the ministry of finance should never accept. It would leave a huge impact on the national budget,” said Hassan, now dean of Islamabad’s National University of Sciences and Technology. “If the government injects any money into PIA, it would only help it to survive for another year and nothing more.

“The only solution for this corporation is privatisation. Anything else is a waste of time and money.”

PIA was created in 1955 and performed well until the 1970s when corruption and overstaffing hit company fortunes. PIA’s reputation was further battered in the 1980s as it failed to maintain its fleet, said economic expert Shahidur Rehman. “The year 1990 signalled further defeat for PIA, when legislation liberalised to allow more competition in the flight market.” PIA, however, remains the largest operator on Pakistan’s international and domestic routes.

Published in The Express Tribune, November 12th, 2010.
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