PIA bleeding under accumulative losses of Rs356bn: SC told
Islamabad (TP): The national flag carrier, the Pakistan International Airline, is currently facing an accumulative loss of Rs356 billion besides having staggering liabilities of Rs406 billion against the assets standing at Rs111 billion.
This was revealed by a report submitted to the Supreme Court on Friday by the PIA Corporation on behalf of its Chief Executive Musharraf Rasool Cyan in the suo moto case regarding the losses of the national flag carrier.
The report further said that the PIA would not have been able to continue its operations if the government stopped its time-to-time intervention in the shape of financial assistance and grants.
The top court was informed that placing Markhor on the tail of planes was part of PIA’s new initiative to transform the airline. “The re-branding and pasting the picture of the national animal at the tail of the aircraft aims to place the Pakistani flag on the fuselage,” the reply stated.
While elaborating the gross mismanagement of the PIA over the decades, the reply said the PIA required urgent intervention for turnaround and for a strategically-driven business transformation to take it out mismanagement, corruption and political interference.
“The current management is bringing reforms, reconstruction, modernization and financial independence of the PIA with a commitment of ‘no privatization but a renaissance,’ the report claimed.
“The existing aviation policy had been detrimental to the local industry and unjustifiably worked to the advantage of Gulf-based carriers that had usurped a large part of the airline industry’s market share with a major impact on the PIA,” the report said.
“The poor and/or corrupt decisions by previous managements continue to drain the PIA of cash through non-commercially viable contracts with no exit clauses, and decisions can be subjected to forensic audit by any reputable and credible firm of auditors.”
“The turning around of the PIA is a complex task that requires a multitude expertise, skills, capabilities and core competence,” it said.
The reply stated that “some of the challenges and reforms needed by the PIA include management experience, airline industry business experience, strategic business planning and business transformation experience”.
The report also explained the weaknesses and a range of fundamental operational problems which have plagued the PIA. These include the grave cash flow shortage resulting in salaries of employees, utilization of pension funds for operational expenditure, grounded aircraft, outdated IT system and no compilation of management information.
The reply termed grounded aircraft a major failure of the previous management. “It is estimated that PIA paid $6.67 million (Rs767 million) in wet lease rentals while the planes remained out of the scene. This also resulted in the loss of revenue of $36.5 million (Rs4.2 million),” said the report.
This has further exacerbated by the previous management acquiring four A320 planes on a lease to make up the shortfall in the aircraft fleet.
The reply said that the past management never considered corruption as a major issue but “the new management had undertaken a diagnostic work and removed a number of managers from key positions as a result of investigations”.
It, however, said that the PIA’s management was experiencing serious difficulty because every decision or action taken landed in long litigations without complying with the principles of natural justice.
The reply prayed to the top court for lifting the ban on recruitment with directions to associations and unions to refrain from propagating against the PIACL. It also requested the top court for passing orders for expeditiously disposing of pending court cases.
The report has further requested the top court to pass orders for the removal of PIA CEO’s name from the exit control list enabling him to discharge his duty properly.