PIA seeks Rs 10bn equity injection

Breaks even for the first time since 1996

By our correspondent

LAHORE: Pakistan International Airlines, after breaking even for the first time since 1996, has requested the government to provide Rs 10 billion "equity injection" to run the organisation profitably. Talking to newsmen at an iftar dinner hosted by him in honour of the newspapers owners, editors and seniors journalists at a local hotel on Saturday, Managing Direct PIA Ahmad Saeed disclosed that for the first time since 1996 PIA had been breaking even for the last six months despite huge losses on the domestic subsidised routes to the tune of Rs.200 million per year. He said Rs.20 billion package given by the government to PIA was not an "injection", rather the amount was meant for shedding its huge liabilities. Out of the amount Rs.5 billion was for "bridge financing" while Rs 6 billion for restructuring of loans, he said.

Answering a query, the MD PIA said in the next 8 weeks PIA would introduce TF Certificates which would be backed by the government with Rs 15 billion. To a question regarding the increase in PIA fares despite a drop in fuel prices, he said, "PIA fares are the cheapest in the entire world. Our neighbour India is charging at least 30 per cent to 40 per cent more than Pakistan on its domestic routes, while we are suffering losses on Gawadar and Pasni routes." Her said, "We have requested the government to either take over these routes or allow a private airline to operate on these routes."

He said many steps were being taken to cut down the huge expenses. The flights had been scheduled on daily basis to cut the costs, the curb on unreasonable allowances of the cabin crew amounting to Rs 1.5 billion had been cut down to Rs 750 million. However, he admitted, he had not been able to control the major causes of the losses, nor had he been able to crush the "reservation mafia" and Engineering Department's heavy expenses. He said, "I am trying very hard to solve all the problems and when these problems are over we will have big profits."

On another query he said PIA had earned Rs 5 billion as compared to the last year's Rs 3.7 billion due to September 11 situation. He said, "We would have earned a lot more had we been able to charter more planes, but the insurance costs were 500 times higher than the usual." On retrenchment , the MD said there would be no retrenchement on the lower level since it would not make much financial difference. On Brig Nayar Afzaal's removal, the MD said, "He was to go since he had come for two years."

On the question of buying new planes, the MD said, "Yes, we need a new fleet, but we are not in a position to purchase new planes." On American request to provide information about passengers, he said it did not make much difference since it happened all around the world. On yet another query about the bearded cabin crew, he said, "We have asked them not to grow beards for their own safety in present circumstances abroad." On the question of foreign posting against the rules, the MD said that it was being done on merit.