Plan to split PIA into two firms

Published April 28, 2021
The federal cabinet on Tuesday discussed a plan to split the national flag carrier Pakistan International Airlines into two companies. — AFP/File
The federal cabinet on Tuesday discussed a plan to split the national flag carrier Pakistan International Airlines into two companies. — AFP/File

KARACHI: The federal cabinet on Tuesday discussed a plan to split the national flag carrier Pakistan International Airlines into two companies and returned the matter to the Economic Coordination Committee (ECC) for some changes.

The plan was originally approved by former prime minister Nawaz Sharif during his last tenure. In 2015 the then government managed to convert the Pakistan Interna­tional Airlines Corporation into a company through legislation. However, the plan could not be implemented then because of strong protests of PIA employees as well as opposition parties, who opposed the move that could lead to the privatisation of the airline.

In Tuesday’s meeting, the cabinet in a bid to pull out cash-strapped PIA from the financial crisis discussed dividing the organisation into two companies — new and the old PIAs.

Information Minister Fawad Chaudhry told Dawn in the evening that the cabinet had in principle approved the plan to divide the national carrier into two companies, but sent the summary to ECC again for a few changes.

Earlier in the media briefing, he did not provide much detail about the plan as he said the cabinet was apprised that the operational losses of PIA had come down from Rs57bn to Rs1bn, which he said was a great success of the present management.

“The real problem of the PIA, however, is its loan which caused an overall loss of Rs460bn,” he added.

He said that the PIA’s aircraft-to-employee ratio was 450, which was highest in the world. “The previous governments of the PML-N and PPP had ruined the national institution by making political and unnecessary appointments,” he alleged.

Earlier this month, the ECC had approved a restructuring plan of the PIA that includes splitting the entity into two, slashing about 25 per cent of the total staff, etc.

In the ECC meeting, Prime Minister’s Adviser on Reforms and Austerity Dr Ishrat Hussain had presented a plan for amortisation of Rs457 billion worth of liabilities by FY2023. Of this, the ECC had approved absorbing about Rs202bn of liabilities as federal government equity in PIA during the current fiscal year, for being a non-cash transaction.

An official statement issued after the ECC meeting had said Dr Hussain made a detailed presentation on “human resource and operational restructuring” of PIA and suggested various options for restructuring, including measures to minimise losses and transform PIA into a financially viable entity. These included human resource restructuring through Voluntary Separation Scheme (VSS), hiring aviation experts, fleet modernisation, routes rationalisation, product development and revenue enhancement measures.

After detailed consultation, the ECC recommended the restructuring plan of PIACL for onward submission to the cabinet.

Published in Dawn, April 28th, 2021

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