Either privatisation or shutdown

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The only two options

One thing stands established: no government, including the present one, can resist temptation of reducing PIA to an organisation catering to political cronies and favouritism in procurement contracts, leasing of aircrafts, giving out GSAs etc. In such a situation an independent management by a private party, with majority control of BoD, seems to be the sole option left.

This exercise though has to be executed transparently, otherwise it too will fail.

It should have either been closed or thoroughly restructured under an independent management with full powers of hire and fire years ago.

Lack of political will or intent has led to further aggravation and by December 2013, PIA’s total accumulated loss exceeded Rs200 billion, with its surplus manpower contributing to rise in administrative costs, and a corrupt mediocrity dominated management signing controversial procurement contracts, resulting in half its fleet grounded.

In spite of shrinking revenues, and schedules, employee strength increased with more recruitment in violation of merit. With a serviceable fleet of under 25 aircrafts and over 18,000 employees, including over 609 operational pilots, another 250 trainee pilots were recruited by former MD Capt Aijaz Haroon and Capt Nadeem Yusafzai, although according to both regional and international practices 7 or 8 sets of pilots i.e., 14 to 16 pilots are required for scheduled airline operation.

PIA faces a choice of total shutdown, or handing over management to a private party of repute, free from political and bureaucratic control, if it has to survive. The decision of offering 26 per cent shares and management control seems to be the only viable option, because a total sellout involves over Rs250 billion handout to any party willing to buy PIA with all its liabilities, which is not financially feasible given the national exchequer’s grave situation.

The other option for the federal government is to follow what was done in the Philippine Airlines, where general redundancy was announced, bankruptcy declared and all employees terminated with one to three month’s salary. The Philippine Airlines reopened thereafter, rehiring essential staff.

In case of 26 per cent share and management control, iron clad guarantees should be incorporated to ensure that neither PIA routes, nor its assets are to be sold by new management, while the government bears the liabilities, offering all or a share of profits to new management, which would still save it over Rs36 to Rs40 billion that it has to inject annually into this loss making white elephant.