November 20, 2002	Wednesday	Ramazan 14, 1423

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NEW YORK, Nov 19: Saying that Pakistan International Airlines was losing money on most routes except Saudi Arabia, the managing director of the PIA, Ahmad Saeed, asserted on Sunday that he would turn the airlines around within next two years.

In an interview with Dawn after signing agreements with Exim Bank in Washington to acquire a new fleet of Being 777, Saeed said despite reports of profits this year the airlines was still losing money on most of its stations, particularly New York.

However, he underscored that “It’s in North America, where PIA’s future lies” and that the airlines plans to expand operations to Chicago and Houston within next year.

Saeed said he planned to “infuse” new blood in the airlines by hiring new highly qualified people from outside the system as directors, general managers and managers and replace the present ones.

Realizing that such a proposition was a daunting task, he said he had the support of PIA chairman Hamid Nawaz and the Board of Directors to bring in new people and had hired Masey Ferguson accounting firm to shortlist candidates for top finance and technology posts in the airlines.

HE SAID: “The PIA needs major shakeup in the workplace as there is a total breakdown in services and cases of massive pilferage in the engineering department are endemic which need to be plugged in.”

The PIA MD disclosed that the airlines’ estimated pilferage losses of Rs1.5 billion yearly from the engineering department alone, and added: “We cannot outsource a department of 5,000 people so we have to devise ways to control the losses.”

Emphasizing that “we are trying to minimize the losses,” he lamented that “the pace is very slow because right kind of people are not in place as yet.”

Listing reasons for PIA’s other difficulties in turning around, the airlines MD said presently “PIA is suffering because of bilateral agreements made by previous governments giving other carriers like the Emirates, Kuwait Airways, etc., lucrative domestic routes to operate from without securing reciprocal rights to operate from their stations.”

He hoped that with the induction of new aircraft to the fleet PIA’s operations would become more cost-effective and the airlines would be able to offer better product to the clients.

NEW YORK: Responding to questions about the airlines’ losses in New York despite the fact that the PIA was carrying full load of passengers on North American routes (New York-Toronto), Saeed said the biggest problem in New York was the management and accounting practices which had resulted in massive losses.

“We have chronic labour problem in New York and the airlines has not been able to collect more than two million dollars in accounts receivable because of bad accounting practices which will have to be written off,” he said, and added: “We plan to take action against people who have been identified as being responsible for the losses incurred by the airlines.”

TERM FINANCE CERTIFICATES Meanwhile, PIA chairman Lt-Gen Hamid Nawaz Khan (retired) and Ahmad Saeed said the government would issue term finance certificates to fund the structuring of the Pakistan International Airlines.

Khan told Dawn that the government had agreed to provide an equity of Rs20 billion to save the PIA from a possible collapse. Of these, Rs4.7 billion had already been given to the PIA as bridge finance. The rest, he said, would be raised through term finance certificates to be floated by the government.

These certificates, Khan said, would be fully backed by the government and offer attractive returns to the investors. The current bank interest rate in Pakistan was 9.5 per cent but those investing in the PIA certificates would get 11.5 per cent interest on their investments.

He said the situation in PIA was so bad that in May last year, auditors urged the airlines to file for bankruptcy. The companies that supply goods and services to PIA had informed the airlines that they would no longer give credit to the airlines and instead demanded hard cash, he added.