PIA chairman says airline incorporating small changes; looks to fly out of red.
After a very long time, things seem to be working in favour of Pakistan International Airlines (PIA).
It has a board of directors, which includes some of the most respected corporate executives, a management relatively free of political interference, a government injecting money to lease more jets, calm employee unions and a global economic situation that has halved jet fuel expense.
It also has an optimistic chairman, Nasser Jaffer, believing that a few basic steps can alter the fate of the airline.
“We are telling our employees to do simple things like tell a customer to have a nice flight, greet them and smile,” he said in an interview with The Express Tribune. “The change is coming but it is going to be very gradual.”
PIA has suffered every kind of infamy: cutlery deliberately destroyed so commission could be made on new order, aircraft parts procured that were never needed, flight crew arrested at European airports for smuggling drugs, computerised sale of tickets tampered with to make quick bucks and above all a culture of nepotism that has few parallels.
None of this has missed Jaffer’s notice. “The flaw with PIA is zero accountability. The problem is that 10% crooks are getting away with what they do and the rest 90% turnaround and say what difference does it make if we don’t work.”
On the way to correction
A drive to weed out the bad eggs is already under way. More than 300 employees with fake degrees have been fired over the past one and a half year. Anyone found to be involved in a case of smuggling is immediately suspended.
PIA has had great corporate names like Tariq Kirmani and Zafar Ahmed Khan in the same position before him. But Jaffer is working pro-bono - that is without pay. “People don’t have any reason to criticise me,” he says.
The airline has also taken some extraordinary steps to stop pilferage. While it is not unusual to see serving Pakistan Air Force officials deputed to PIA, officers have been brought in specifically to runs its procurement and logistics (P&L) department, responsible for overseeing multibillion rupee transactions.
P&L streamlined procedures and made it hard for middlemen to manipulate the system by changes directly dealing with authorised agents of Original Equipment Manufacturers (OEM) for purchase of jet parts. While outcome of these measures could be partly seen in the financial results of hitherto cash-strapped airline, the fact is that luck has been on the side of present management. Oil price has plunged around 50% since June 2014, allowing PIA to spare cash to meet its expense.
One reason for decay in performance of PIA has been its image as a liability on taxpayers. Since 2005, successive governments have been drip-feeding the airline with loans, guarantees and cash to pay salaries and creditors. Now the airline is saddled with long-term debt of over Rs75 billion. The interest expense itself adds billons in losses to airline’s bottom line.
“There are a lot of interest-bearing accounts we are living with. And with negative cash-flows there is always going to be difficulty in turning it around,” Jaffer said.
Airline is in talks with its majority shareholder - the government - to find a way to restructure debt. No timeline has been shared but the chairman insists it’s imperative to take PIA out of the red.
The money injected
And the PML-N government is supporting it. In the past few months, it has given it over $50 million to lease much needed aircraft.
PIA is on its way to expand the size of its fleet to 42 aircraft after inducting nine Airbus 320s and five ATR turboprops in the last few months. Six more jets including two Boeing 777s are expected to be added in the coming months. Jaffer says more planes means the airline would be able to improve punctuality of flights.
Yet, there is one thing standing between Nasser’s optimism and PIA’s turnaround - the intense, and often unfair, competition from foreign airlines that has seen Pakistan’s national flag carrier lose market share year after year. “Ideally, if I had my way, I would stop every airline from coming to Pakistan. But unfortunately PIA doesn’t have that many airplanes (to fill the gap),” Jaffer says.
“It’s a bitter pill but we have to compete. If they are trying to buy the market by undercutting us, we would have to do the same.”
Published in The Express Tribune, September 13th, 2015.
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