Pia opens financial bid for 10 aircraft today

Sep 30, 2013 | News

ISLAMABAD: The Pakistan International Airlines (PIA) will open on Monday (today) first bid for obtaining 10 additional aircraft on lease, to improve its services and overcome losses.

Although the PIA management has sought financial bids for acquiring 10 aircraft either on lease or on payment, it prefers the former option, according to sources.

“We are opening two separate bids for obtaining 10 additional aircraft on lease or on purchase on Sept 30 and April 4, respectively,” PIA spokesman Mashhood Tajwar told Dawn.

He said that negotiations were under way with different banks for loans to get the planes on lease because even in case of lease PIA would have to pay some initial amount to the contractors or the aircraft companies.

When asked whether acquisition of the ten aircraft could help scuttle the government’s plans to privatise the airline, Mr Tajwar said it would help ease the financial crisis being faced by the company.

“At least a monthly loss of Rs3 billion would be controlled after the new planes become operational,” he remarked. “Out of the Rs3bn loss, Rs1bn goes to repayment of international loans, Rs1bn to payment for fuel and Rs500 million to retirement of local loans.”

He said the PIA’s total liabilities amounted to Rs250bn whereas the worth of its assets ran into trillions of rupees.

It has been learnt that the government’s announcement regarding privatisation has served to bring about some improvement in the airline’s efficiency.

“We find some improvement in the efficiency of the PIA,” acknowledged an office-bearer of the Pakistan Air Line Pilots Association (Palpa). A senior official of the PIA said three under-repair aircraft were inducted into the airline’s fleet of operational aircraft this week, taking the total number of such planes to 24.

Meanwhile, PIA employees have decided to move the Supreme Court against the proposed privatisation of their company.

They demand of the government to make at least one “sincere attempt” to bring the organisation to its feet before going for privatisation of 26 per cent of its shares, as announced by Nawaz Sharif.

One of their major demands is that the government should carry out an audit to ascertain real worth of the company’s assets, which is said to be in trillions, and its total liabilities.

The decision to move the court against the government’s plan was taken by the recently-formed Joint Action Committee (JAC) which comprises associations of PIA officers and employees.

The JAC feels that the national carrier can be revived and its losses can be curtailed through better planning, including induction of some new aircraft into its fleet.

“We have consulted our legal team and decided to put our complaints before the Supreme Court,” a member of the JAC and secretary general of the PIA Corporation Employees Union, Obaid Ullah, said.

He said that PIA employees held 12 per cent shares of the airline but the government had not taken them into confidence before announcing the plans for privatisation. “We believe that 21,000 employees of PIA will get justice from the Supreme Court,” he said without elaborating.

The federal cabinet recently approved the proposed privatisation plan.

According to the PIA management, the monthly loss of Rs3bn was not because of overstaffing but due to debt retirement and heavy consumption of fuel by outdated aircraft. If the airline acquired 10 to 15 additional aircraft the organisation could overcome its monthly loss, an office-bearer of Palpa said.

At present PIA has a fleet of 32 aircraft, of which 24 are in operation. But those in operation are 15 to 20 years old and, therefore, consume great amounts of fuel.

A related problem is that big aircraft are being used for short routes because the organisation does not have small planes for domestic routes. It has also been learnt that one of PIA’s hotels — the Roosevelt in New York — got an offer of $5bn a couple of years ago, but the Privatisation Commission did not accept the offer. One of the PIA hotels is located in the expensive Champs-Élysées area of Paris, and its price is said to be over $2bn. Another PIA hotel is in the UAE.

Source: Dawn News

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