FRIDAY NOVEMBER 04: PIA restructuring: no bail-out without roadmap, says Prime Minister

ISLAMABAD: Prime Minister Yousuf Raza Gilani has reportedly refused to inject Rs 20 billion in Pakistan International Airlines (PIA) without a clear roadmap for the national carrier's financial and administrative restructuring, it was reliably learnt.
Sources said the Prime Minister also rejected the proposal of PIA management with respect to conversion of Rs 8 billion government loan into equity and roll over of Rs 19.6 billion Term Finance Certificate (TFC) and Sukuk for five year grace period and $146 million bank loans.
While chairing a meeting on restructuring of PIA, Gilani reviewed the proposals of the Cabinet Committee on Restructuring (CCOR) and directed the Committee to give final recommendations encompassing improvements in corporate governance, services and financing requirements as "business as usual is unacceptable".
The Prime Minister also constituted a committee under the chairmanship of Finance Minister Dr Abdul Hafeez Sheikh with Secretary Cabinet and Defence Secretary as members. The Committee will submit a report to the Prime Minister within a week, outlining a roadmap for PIA. Gilani said the members of Board of Directors will be approved as per the recommendations of CCOR. He also gave full authority to the committee to make viable recommendations aimed at making PIA stand on its feet and compete with other international airlines.
The Prime Minister said the restructuring of PIA will incorporate professionalism, autonomy to the Board of Directors and no bureaucratic impediments in decision-making processes. An official said the financial restructuring plan submitted to the CCOR depicted a bleak fiscal position of the PIA with monthly losses soaring to Rs 1.039 billion.
PIA expenditure stood at Rs 65.95 billion during the first half of 2011 against total revenue of Rs 55.83 billion. It requested the government to inject Rs 20 billion with a promise that the management would undertake financial restructuring of the entity. The PIA management claimed that restructuring would help in saving Rs 266 million on financial side, Rs 474 million from fleet renewal and revenue initiatives and Rs 340 million from operational restructuring by 2013.
The meeting was attended by Finance Minister Dr Abdul Hafeez Sheikh, Nadeem Khan Yousufzai, MD PIA, Dr Mushtaq Ali Khan, Chief Economic Advisor, State Bank of Pakistan and other officials of Ministry of Finance, Planning Commission and Prime Minister's Secretariat.