Prime Minister Yousuf Raza Gilani on Thursday rejected a long-term business plan submitted by PIA management and directed preparation of a new plan to make the national flag-carrier efficient and profitable.
The Prime Minister's rejection, analysts maintain, was premised on President Asif Ali Zardari's address on the fourth death anniversary of Benazir Bhutto when he claimed that he tried to save the PIA twice: the first time when former Finance Minister Shaukat Tarin insisted on a business plan, thereby refusing to take the President's advice and sanction purchase of planes when they were being offered at 20 cents to the dollar. And the second time when the unions opposed the code sharing plan with Turkish Airlines.
Interestingly, Chaudhry Ahmed Mukhtar, Minister of Defence, had stated on October 2, 2011 that PIA would not be in a position as it today is if the restructuring proposed by President Zardari had been implemented. He accused Shaukat Tarin of rejecting the summary on PIA restructuring several times.
In view of the President's concerns the Prime Minister, sources allege, revisited the long-term 10-year revival plan drafted by PIA. According to sources the relevant ministries, including finance, had approved the business plan. A PIA spokesman confirmed that not the entire plan but some parts were unacceptable to the Prime Minister. He said he did not have details which aspect of the plan had not been approved by the Prime Minister.
Chairing a meeting at the PM House to review PIA's Plan, the Prime Minister directed the committee to formulate final recommendations before submission to the Cabinet Committee on Restructuring (CCoR) meeting scheduled for next week. The committee comprises Secretaries of Cabinet, Finance, Establishment and Defence. The PIA proposed business plan focused on improving corporate governance, financial restructuring, operational restructuring, marketing and enhancing the fleet.
PIA had proposed a comprehensive fleet renewal and expansion plan to meet the projected needs of the next 10 years, the official spokesperson of PIA disclosed. According to the business plan, PIA will purchase 25 more aircraft and the total number would reach 64 by 2020, the spokesman revealed. PIA has 39 aircraft in its fleet comprising 4 Boeing 777-200 ER, 3 Boeing 777-300 ER, 2 Boeing 777-200 LR, 6 Boeing 737-300, 5 Boeing 747-300, 12 Airbus A310-300 and 7 ATR 42-500.
The business plan includes purchase of 40 fuel-efficient new passenger aircraft to replace the ageing fleet of the national carrier in the medium term, official sources added. Addition of new aircraft would make airlines fuel-efficient and help eliminate fuel losses caused by old and ageing PIA fleet, said the sources.
At present PIA losses amount to Rs 800 million per month - which require bailout packages and government support to make any purchases. In the late 90s, the Government of Pakistan considered selling the airline to private sector due to persistent losses suffered by the airline.
The government announced its plan to privatise the national carrier but the plan was not implemented. Several steps towards outsourcing of non-core business have been initiated. During 1997, Pakistan called in a team from International Finance Corporation (IFC), the consulting arm of the World Bank, to advise on restructuring and privatisation of PIA, but to no avail. On February 18, 2009 the carrier was dropped from the list of entities targeted for privatisation.
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