RAWALPINDI: Pakistan International Airlines (PIA) has set a target to reduce the number of its employees to 7,500-8,000 for 29 aircraft — over half of the total strength — through the Voluntary Separation Scheme (VSS) and segregation of core and non-core functions, said a PIA management report filed before the Supreme Court.
At present, PIA has 14,500 employees for its fleet of 29 planes compared to 31,000 employees working for a fleet of 329 aircraft of Turkish airlines.
According to the report, excess manpower has been of great concern for the PIA management. The excess workforce with little work to perform continuously engaged themselves in disruptive activities that negatively impacted others employees’ productivity, the management claimed, pointing out that many workers were doing little or no work with the result that others working hard also got de-motivated.
Keeping it in mind, the PIA report said, it was critically important to right-size the workforce and with the approval of federal government, PIA management offered VSS to employees on Dec 7, by offering them one-time payment (the VSS process is likely to be concluded within two months).
Courier service with 320 employees shut in November, PIA management tells SC
The Supreme Court was informed that the PIA management had planned to bifurcate its employees into two categories, core and non-core businesses. The PIA had not been able to perform well in its core business so the non-core businesses had been suffering more gravely. Hence, instead of operating as small profit units, they were hemorrhaging costs and heavy losses, further becoming a big liability for the parent company itself, the report stated.
It added that PIA undertook a wide range of non-core business functions comprising food services and technical ground services, repairs and maintenance of aircraft fleet through a large engineering facility, Precision Engineering Complex (PEC), and Speedex courier service.
These areas consumed a great deal of executive and management time and essentially became distractions from the core business that resulted in lack of focus on PIA’s core business, the report said.
The ‘core’ category comprised the marking, human resources, finance, flight services and procurement departments. After reduction of 3,977 workers from non-core areas, PIA would be saving Rs6.1 billion a year, the report revealed.
Besides, the PIA had extensive aviation engineering capability and with some additional capital investment and technical expenditure in MRO, PIA engineering services could be positioned as a separate company that not only provided services to PIA, but also got business from other airlines in the region, the report said.
It was planned that the engineering services be transformed into a separate business unit by entering into an appropriate joint venture with a leading company, the report said. Under this plan, it added, PIA would offer its services not only in Pakistan but also in regions like Africa and Asia where the demand for such services was rapidly growing. The report said it was a high potential area for business expansion through a separate subsidiary company, free from PIA, and therefore the management could focus on the core business.
According to the management, a separate feasibility/business plan is being prepared to establish PIA engineering services as an independent company by the mid of 2021. The process has already started for tender for valuation of material and infrastructure.
Besides, the report mentioned, PIA was not well positioned to have effective food operations for a number of reasons. According to the management, the flight kitchen has major core competency gaps as little or no qualified workforce is in place. The facilities and catering equipment are old and require significant upgrade involving capital investment. Given these issues, PIA’s food production quality could not be improved beyond a certain level, as this required a total transformation of the food operations and upgrade of core competencies, it said.
The management believed under these circumstances, it made a perfect business sense to either partially or completely outsource the food operations by entering into a joint venture with a leading company in the industry with expertise of large-scale catering services.
While it was planned that PTA’s food operations would be tendered in the second quarter of 2021 to form a joint venture, the tender for valuation of material and infrastructure was already under process, the report said.
PEC being transferred to PAF
It said that Precision Engineering Complex (PEC) being a strategic unit contributed very little towards PIA, therefore, the prime minister had already given an executive order to transfer PEC to Pakistan Air Force.
Also, the Technical Ground Services (TGS) are increasingly being outsourced by airlines and a number of companies have emerged in the market with specialized services. PIA had struggled in this area with absolutely outdated equipment with average age of 20-30 years that often resulted in delays and other problems, the report said.
The courier wing of PIA, Speedex, whose infrastructure was scattered over 74 domestic destinations with 320 employees had been closed in November 2020. The total saving from human resource rationalization would be Rs10.3 billion per annum, the report said.
Published in Dawn, December 17th, 2020