Cabinet likely to rid PIA of debt amounting to billions of rupees

ISLAMABAD: The federal cabinet is likely to take a decision regarding the hefty Rs500 billion debt burden on the Pakistan International Airlines (PIA).

According to sources, PIA Chief Executive Officer Air Marshal Arshad Mahmood Malik will brief the federal cabinet, scheduled to meet on Tuesday, about restructuring reforms introduced in PIA to make it self-sustainable "without seeking financial help from the government".

"Even with operational profits, the airline will not not be able to come out of the financial quagmire," an insider told Profit. "The burden of debt servicing is unsustainable."

Sources said the cabinet would also be briefed on the airline's foodservice division (FSD), technical ground service (TGS), base management of engineering department, revenue enhancement strategies, human resource restructuring, financial restructuring, and measures pertaining to Precision Engineering Complex (PEC).

The PIA management has been evaluating the possibility of giving a management contract of food services at Karachi and Islamabad. While this will not generate much in terms of cost saving, it will definitely improve product quality and customer satisfaction.

Similarly, the PIA management has been evaluating the possibility of giving an operation and management contract for technical ground service.

Sources said the airline is also evaluating different options to get out of the courier business which was launched by PIA in 2003. It has been considering outsourcing or partnering options for Speedex.

Moreover, they added, the airline is tackling revenue enhancement strategies, route rationalisation, product improvement, yield enhancement, enhanced focus on corporate business, network optimisation, ancillary revenue, codeshare of the alliance to expand the network, revamping of web business portal and offering special packages for online users and reduction in distribution cost by implementing HITIT portal plus.

An official of PIA, on condition not to be named, said that total debt of PIA accumulated till 2019 was Rs464 billion, while the exchange rate loss amounted to Rs47 billion.