KARACHI, Sept 7: Some 25 per cent of the staff of the national flag carrier may have to be axed to pull the airline out of its current financial crisis, the new head of the Pakistan International Airlines (PIA), Zaffar A. Khan, hinted during an interview with Dawn at the PIA headquarters.

The move is part of a rightsizing programme and the management’s long-term measures to reduce operational costs and improve performance. “We have to decide whether we want to run this airline on a commercial basis or as a social welfare service,” said Mr Khan.

In an effort to justify the imminent sacking of employees, he said: “We have 430 to 440 employees per aircraft as compared to other good airlines, which have 200 employees for one aircraft. “Currently, we have a workforce of over 18,000 and if we go by the international standard, almost one-fourth of the total employees, or around 5,000, should be counted under rightsizing. “Ultimately, we have to address this (rightsizing) issue some time next year in a sensible and humane way,” he explained.

Armed with the experience of several senior posts such as the chairman of the Pakistan Telecommunication Company Limited (PTCL), chairman of the Karachi Stock Exchange and president of Engro Chemicals, Mr Khan took control of the airline in April this year. With the airline beset with myriad problems, Mr Khan chose to speak on issues such as the overall financial condition, overstaffing, short- and long-term measures to turn the loss-making airline into a profitable entity, the European Union’s ban on 20 PIA planes, need for capital injection and a fleet modernisation plan.

‘Who would purchase PIA?’

While not ruling out the option of privatisation, he asked: “Who would purchase the airline with Rs32 billion of accumulated losses and over-employment?” he asked. “But at some point the government will have to address the issue of PIA’s privatisation, which is on the approved list of the Council of Common Interests (CCI).”

He admitted that the airline was in dire need of capital to facilitate infrastructural development and cut borrowing costs, yet had limited channels of generating funds.

“A rough estimate suggests that we have an immediate need of approximately half a billion dollars to bail the airline out,” said Mr Khan. “We have to improve our infrastructure, replace old aircraft with fuel-efficient ones, construct new hangars and fix electricity problems since our generators are too old. All these require capital and it is difficult to generate revenue.”

Mr Khan presented two options to generate capital: the controversial sale of the PIA-owned Roosevelt Hotel in New York’s upscale Manhattan, and Scribe Hotel in Paris.

“On the basis of its national strategic consideration, the government injects capital into the airline, which seems difficult. The second option is that PIA sell valuable properties in New York and Paris to ease the financial burden,” he pointed out.

He regretted that the latter option had become highly politicised, giving rise to the debate that the asset was up for sale at a throwaway price. “Consequently, it will not be sold but PIA is going bankrupt,” he remarked.

“The bottom line is clear. We need capital to keep our head above water. The sale of PIA’s property is the only way to generate the capital badly needed to run the airline,” he said, adding that he would never have agreed to the sale of Roosevelt Hotel if it were not going to give PIA good value.

Referring to various short-term measures introduced by the management for the July to December period, Mr Khan stated that PIA was currently incurring a loss of Rs1.2 billion per month and required urgent measures to manage its financial crunch.

EU ban