RAWALPINDI: Pakistan International Airlines (PIA) intends to demolish the iconic Roosevelt Hotel in New York City to pave the way for the construction of a new hotel through a joint venture, a representative of the Aviation Division informed the Senate Standing Committee on Aviation on Wednesday.

The PIA owns 37 buildings across the globe, of which 29 are located in Pakistan. After renovations that cost $6 million, the hotel was handed over to the New York City administration for three years, and it is currently being used as a centre to house migrants.

Senator Saleem Mandviwalla presided over the meeting in the absence of committee chairman Senator Hidayatullah. The committee was informed that the financial advisers who had already been working on PIA’s privatisation would also give their suggestions on Roosevelt Hotel, but the PIA properties have no link with the privatisation.

The Aviation Division official said the company would face massive losses if the agreement did not materialise.

PM’s aide says airline needs Rs22bn till June to upgrade and regain optimal operational state; total liabilities stand at Rs266bn

Saleem Mandviwalla, however, inquired about the management of the hotel and sought comprehensive details at the next meeting.

The Senate panel was informed that PIA paid $26 million to a leasing company to retrieve its two aircraft stranded in Jakarta. One Airbus A320 arrived on Tuesday night whereas the other plane would be back in a couple of weeks.

A PIA official said the airline has decided to outsource its flight kitchen near the old airport to save cost, as it was far away from the Islamabad International Airport.

The committee was informed that the financial advisers would make recommendations about the future of the PIA employees and the government would then decide whether the employees would be offered a golden handshake or they would be retained in the other company after the privatisation.

The PM’s adviser on aviation, Farhat Hussain Khan, informed the panel that the airline could earn up to Rs8 billion if the UK route were to be restored. The committee was also briefed on the fuel issue between the state-owned airline and the Pakistan State Oil.

It was informed the PIA was getting fuel from the PSO on credit, but due to some issues, its flights dropped to 45 from 85 to 90 per day. In November, the situation was normalised.

“PIA has also rationalised its flights from 85 to 79 because it cannot operate flights on the routes which are not feasible,” the official said.

The PIA representative informed the meeting that the airline could be operated independently if two Boeing 777 and five Airbus planes, which needed repair and other maintenance, became operational.

At one stage, the media was asked to leave the committee room by the Senate panel’s chairman as the PM’s aide was not willing to share details of the updated position of pilot licenses in front of the media.

Privatisation process

Retired Air Marshal Farhat Khan explained to the committee members that on August 7, 2023, the PIA was approved for privatisation; on August 29, the summary was presented to the prime minister.

There had been follow-up meetings to accelerate the process, and by the end of September, it was completely approved for privatisation.

Highlighting the crisis of Pakistan State Oil (PSO), Mr Khan informed the committee members that before the PSO crisis, the PIA used to generate Rs22 billion in revenue per month.

He added that the PSO required upfront payment, which caused problems for the PIA, resulting in a Rs5 billion loss. He explained that in October, there was a non-availability of fuel, and in November, they paid Rs17 billion, which was helping the PIA to return to its original state.

The chair inquired about the profitability of PIA through flights and its overall operations. The PIA CEO mentioned that the profitability of the route was their primary focus. Senator Afnanullah Khan expressed concerns that the lack of flight availability reflected negatively on the airline.

Mr Khan informed the committee that the PIA required Rs22 billion till June to upgrade and regain its optimal operational state.

While addressing the financial issues and the goal of making the PIA debt-free, the privatisation secretary explained that on October 11, the federal government initiated the process of hiring financial advisers. Out of all the companies considered, four were qualified.

Under a formal agreement, Ernst & Young is currently conducting the due diligence of PIA and is expected to submit a scheme of arrangement and transaction process by the end of December. The secretary mentioned that PIA had liabilities to the tune of Rs266 billion.

Peshawar Flying Club

Moreover, civil aviation officers presented the issues regarding the closure of the Peshawar Flying Club to the committee members. They highlighted that the Peshawar Flying Club had exceeded Rs4.5 million in civil aviation charges.

Senator Mandviwalla expressed disappointment over the absence of the Peshawar Flying Club officers and emphasised the importance of their members attending the next meeting to provide a detailed analysis of the club’s capacity.

Published in Dawn, December 7th, 2023

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