ANOTHER year, another bailout for PIA. This time the request for almost Rs17bn to help the ailing carrier stave off a debilitating financial crunch has arisen because of the currency depreciation, as per the new chairman who is a serving air marshal in the PAF. The amount itself is not very large, considering the past bailout packages that PIA has received, but what is almost certain at this point is that it is only the beginning of a string of demands for similar bailouts that are about to come from the carrier. The reason is simple: the losses at PIA have been mounting for well over a decade now, and despite numerous changes in the top management, and declines in the oil price along the way, nobody has been able to stem the bleeding. The net result is that the total liabilities of the airline have crossed the Rs400bn mark as of August this year, according to the aviation secretary, and its running losses each month are almost Rs2bn. Next to these figures, the Rs17bn disbursement approved by the latest decision of the Economic Coordination Committee is peanuts, to put it mildly.
Of course, this is not an argument to raise the amount set aside for the bailout. On the contrary, the history of PIA’s mounting losses, its skyrocketing debt, and repeated bailouts should give the government pause. Where does this story end? This government campaigned on the promise of change, and the finance minister has repeatedly been saying that the state-owned enterprises can be turned around organically, without any strategic transfer of shareholding. The key, in his words, lies in separating the enterprises from political interference. But beyond this, we have very little idea of what the plan is for these enterprises, and PIA is as good a test case for the government as any. Without a plan to be activated soon, and without appointments of people with the right experience, whose track record inspires confidence in their ability to undertake a huge turnaround, we will simply see this cycle repeat itself endlessly.
Having approved the Rs17bn disbursement for the airline, perhaps the ECC should now ask how the government intends to stop PIA’s slide. There are reports that the air marshal has submitted a business plan to the ECC to turn PIA around, but more details must be shared for a wider, comprehensive discussion. What is the ‘plan’ and who are the people involved in its drafting? How long was it worked upon before being forwarded to the ECC, attached to a request for Rs17bn as an emergency bailout? Tackling the ingrained problems of SOEs is one of the biggest challenges facing this government, and one can be sure the time to set the ball rolling has arrived when bailout requests start coming in.
Published in Dawn, November 14th, 2018