Secretary Aviation Division Muhammad Irfan Elahi said on Monday that PIA owed Rs. 40 billion to Civil Aviation Authority (CAA) under different heads. The CAA may suspend its services for PIA due to non-payment of its dues, which could seriously affect the national carrier’s operations at local airports.
This was information was shared at the Senate’s Special Committee on the performance of PIA which met with Mushahid Ullah Khan in the chair here on Monday.
The committee was informed that PIA also owed Rs 14 billion to PSO.
Financial Advisers are preparing a restructuring/ implementation plan in consultation with Pakistan International Airlines Corporation (PIAC) which would be presented to the Privatization Commission (PC) Board and Cabinet Committee on Privatization (CCOP) for requisite approvals next month.
The committee was informed that on September 29, 2016 a meeting was held between the Privatization Commission, Aviation Division, PIACL, Civil Aviation Authority, Securities and Exchange Commission of Pakistan and Financial Advisers. During the meeting it was recommended that PIACL should update the detailed assessment carried out on its various business segments with assistance from the Financial Advisers.
Furthermore, the meeting called for formulating a detailed Restructuring/ implementation plan, focusing on the proposed segregation of core and non-core business segments of PIACL.
Presently, the Financial Advisers are preparing a detailed restructuring/ implementation plan in consultation with PIACL. The said plan will be presented to the PC Board and CCOP for requisite approvals, officials added.
The meeting discussed serious issues pertaining to the national carrier’s performance and operations including revenue target of 21%, impacts of the Premier Service, defaults in payments to CAA and PSO and renovation/up gradation of fleet of PIA.
The committee recommended the formation of a recovery plan, which may involve making a deal with PSO and others for paying back the outstanding amount. The committee was further informed that PIA is suffering a loss of Rs 2.5 billion per month and is not in a position to pay back the outstanding dues, unless the government intervenes.
The committee, during briefings by PIA directors (who were present in the meeting), was told that PIA has outstanding payments to PSO and CAA for many years which occasionally lead to delays in flights and other hurdles.
The committee directed PIA to finalize an agreement with both as to how these defaults will be paid and in what time frame and also to prepare a revival plan for the company, that is running with an operating loss amounting to Rs. 14 billion during last fiscal year.
The committee also asked PIA to focus on the core business of the company, which is to fly people across the country and to other countries. A third party evaluation based on value-chain analysis was suggested by the committee to enhance the operations quality and generate revenue.
The representatives from PIA told the committee that although the company is still facing losses but the national air carrier is now witnessing an upward trend of increased percentage (37%) of passengers. PIA has also increased capacity of aircrafts by 17% and the number of aircrafts is now 38. The committee also asked PIA to see if the 19,000 people working for airline having 38 aircrafts is a viable option.
The committee sought a detailed report along with all documents containing approvals and correspondence of the tender process of the obsolete 310 aircrafts of PIA. The committee also sought details as to who approved sending a PIA aircraft to Malta for exhibition and permitting its use in a film shoot which might have political and religious implications.
The committee was also briefed about the steps being taken at PIA to improve the crew, their trainings, workshops, upgradation of the seats and other facilities in the aircrafts, and the terms and conditions of the wet lease with Sri Lanka. Members expressed concerns regarding people working at senior positions in PIA having no experience of administrative and human resource management.
The committee constituted a sub-committee to report on administration and operations of PIA and recommend a revival plan. The sub-committee will be headed by Senator Muzaffar Hussain Shah and will have Senators Farhatullah Babar and Abdul Qayyum as members.
The committee expressed extreme displeasure over the absence of Chairman and Chief Executive Officer of PIA who are out of country despite having intimation of the committee schedule. The committee observed that chairman and CEO should be able to prioritize things according to their importance and that the parliamentary committees are to be given priority over other meetings.