PIA’s operational losses stand at Rs2bn a month, Senate body told

Published October 18, 2018
Operational losses are in addition to liabilities of Rs400bn. ─ File photo
Operational losses are in addition to liabilities of Rs400bn. ─ File photo

ISLAMABAD: The Pakistan International Airlines is suffering operational losses to the tune of Rs2 billion per month due to the rupee’s depreciation and a jump in fuel prices, according to Aviation Secretary Mohammad Saqib Aziz.

These operational losses were in addition to liabilities of Rs400bn, including bank loans, he told the Senate Standing Committee on Aviation on Wednesday.

The secretary said the increase in fuel prices and depreciation of rupee against the dollar were the two major reasons for the airline’s losses. Another major factor for the financial crunch was overstaffing, Saqib Aziz added. Financial constraints caused by overstaffing had in turn led to non-payment of salaries this month, he said.

“The matter has been taken up with the finance division and we hope that it will be settled soon.”

Rupee depreciation against dollar and increase in fuel prices are main reasons for losses, says aviation secretary

The Senate committee met for a briefing on various issues concerning aviation, particularly PIA, complications in its new software which was causing errors during bookings, problems faced by parliamentarians and allegations of money laundering by PIA officers.

Senator Hasil Khan Bizenjo inquired how long PIA would continue to suffer losses. The secretary explained that a business plan to turn around the national flag carrier had been shared with the previous government and it was still under process.

However, PML-N Senator Mushahidullah Khan, who chaired the Senate standing committee, intervened and attributed PIA’s massive losses to malpractices in purchase of spare parts for its fleet. “A lot of losses can be cut down if spares are purchased in a transparent manner,” he added.

PIA has 17,000 workers

The meeting was informed that the airline was overstaffed — it had 13,500 regular employees and some 3,500 daily wagers. The ratio of workers per aircraft works out to 450.

The aviation secretary said if non-core staff such as catering, engineering and ground handling crew were separated from the core employees, the ratio of workers against one aircraft would come down to 135 — the same as in India.

In the engineering section alone, PIA has more than 4,000 employees. Members were informed that the PIA employees had gone without salaries this month due to financial constraints.

The meeting was also informed that PIA spent roughly 18 per cent of the revenue on each staff member.

About the financial constraints, the secretary explained that all earnings went straight into banks, which deduct the loans taken by PIA before releasing the remaining amount.

The committee chairman drew the secretary’s attention to recent reports alleging that the Pakistan Stock Exchange (PSE) had declared PIA a defaulter. Mr Aziz said the PSE had issued a warning after PIA management failed to present details of audited accounts and failed to hold its annual general meeting. However, he added: “The trading of PIA shares has not been suspended.”

The meeting was told that five out of the 33 aircraft in PIA fleet had been grounded for maintenance.

Published in Dawn, October 18th, 2018

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