PIA to Undergo Major Overhaul to Fulfill ADB Investment Requirements
1 week ago
It has been told that Asian Development Bank (ADB) will be the strategic investor for Pakistan International Airlines (PIA). Airline’s management has prepared the rehabilitation plan with the consultation of ADB.
A source in the aviation division told ProPakistani about this plan. According to the details, ADB will induct some members in PIA’s board of directors and will work on restructuring the airline. They will help the the airline in making a 180 degree in the management of operations.
ADB has agreed to become a strategic investor but has asked for some hard terms and conditions. ADB’s demands have three major components; human resource, airline loans and government investment in the engineering department of airline.
ADB has ask the government to clean the PIA’s financial books. The loan PIA obtains from government’s guarantee will be transferred to public debt.
“Currently PIA making operational profits but due to heavy Interest and installment the airline finances become red. If the books clean with debt there will be chance to revamp the airline.” Source told.
A financial expert told that the government is the majority shareholder in the airline but when the airline is making losses, instead of inducting money it decided to arrange sovereign guarantee loans for PIA. As a shareholder government must bear the load of these loans.
The source also told that ADB suggested PIA can not sustain in the current management module. PIA’s current organizational structure is very old and obsolete and massive restructuring is required.
“In the restructuring plan, PIA will become a holding company. PIA holding company will only obtain aircrafts and manage flight operations directly. Other departments will be converted into smaller companies with different investors. Flight catering and TGS, Engineering will become separate entities with 51 percent shares owned by PIA.” added the source.
The source also told that PIA’s human resource department is the biggest obstacle in airlines rehabilitation. Many of officers lack basic education for the post and they are employed even though they are not willing to work.
“Work has already started on HR level and lists are being prepared for those who will be sent to the surplus pool,” he added.
Advisor to Prime Minister on Aviation, Sardar Methab Abbasi, already told the media that they have a plan for PIA’s revival and it will be presented in the cabinet’s next meeting.