Pakistan gov’t greenlights radical restructuring at PIA

The Cabinet of Pakistan has tentatively approved a restructuring plan for PIA – Pakistan International Airlines (PK, Islamabad Quaid-e-Azam Int’l) drawn up by the governmental Economic Coordination Committee (ECC) in which the flag carrier will halve its staff numbers and trim its fleet in a bid to become profitable by 2023. The airline’s current bloated workforce of 14,000 staff gives it an employee-to-aircraft ratio that is triple that of either Air France-KLM or Singapore Airlines, according to a study by Bloomberg. But while the fleet will in future be kept under 30 and include more fuel-efficient aircraft, from a current tally of 32, the number of workers will be cut back to about 7,000. About 2,000 people have already accepted voluntary redundancy, the airline has said. Ishrat Hussain, an adviser to Prime Minister Imran Khan, told Bloomberg News on April 27 that the cabinet had approved the restructuring. Once its balance sheet improves, PIA will be instructed to look into selling a 26% stake in the company, he added, while non-core activities like catering and engineering will be outsourced. Assets such as the Roosevelt Hotel in New York, located near Grand Central Station, are likely to be sold or redeveloped. There are “no grandiose plans to become like Emirates or Etihad Airways or Qatar Airways,” Hussain said, but the company will be transformed into “a very lean and efficient organisation.” Unlike previous attempts, he pledged, this time the plans will not be blocked by protesting employees or political opposition. PIA currently operates 32 aircraft, according to the ch-aviation fleets advanced module, including eleven A320-200s, six B777-200(ER)s, two B777-200(LR)s, four B777-300(ER)s, four ATR72-500s, and five ATR42-500s. Fourteen of these are owned and the rest are leased from seven lessors. It has a further five B777-300(ER)s on order. The total fleet size will be “kept under 30,” Hussain said, and PIA will permanently axe routes that are no longer profitable, such as those to Tokyo Narita and Manila Ninoy Aquino Int’l. According to the ch-aviation capacities module, the carrier does not currently operate to either of these destinations. Of its 73 routes, 24 are domestic. Pakistan International Airlines posted a net loss of PKR34.6 billion rupees (USD225 million) for 2020, which despite the year’s Covid-related challenges was actually an improvement from a PKR52.6 billion (USD341 million) loss the previous year. A series of bailouts have enabled it to at least meet interest payments on its significant debts. Separately, Fawad Chaudhry, Pakistan’s minister for information and broadcasting, told the newspaper Dawn that the cabinet had approved in principle a restructuring plan to divide the national carrier into two companies, a newco and the old PIA, but had sent the summary of the plan back to the ECC to make several changes.