PIA to be split into two companies, lay off half workforce

ISLAMABAD: The federal cabinet has decided a plan to split the national flag carrier Pakistan International Airlines (PIA) into two companies besides reducing he workforce into half.

During a meeting on Tuesday chaired by Prime Minister Imran Khan, the cabinet decided to pull out cash-strapped PIA from the financial crisis by dividing the organisation into two companies.

Information Minister Fawad Chaudhry did not much detail about the plan during the media briefing after the meeting. He said the cabinet was apprised that the operational losses of PIA had been reduced from Rs57bn to Rs1bn, which was a great success of the present management.

While speaking to a media outlet later, the minister said the cabinet had in principle approved the plan to divide the national carrier into two companies, but sent the summary to ECC again for a few changes.

He said the real problem of the PIA is its loan which caused an overall loss of Rs460 billion. He said the PIA’s aircraft-to-employee ratio was 450, which was highest in the world.

He alleged that the previous governments of the PML-N and PPP had ruined the national institution by making political and unnecessary appointments.

The plan to split the airline into two companies was originally approved during the tenure of former prime minister Nawaz Sharif. In 2015, the airline was converted into a company called Pakistan International Airlines Corporation (PIACL).

The plan could not be implemented due to strong protests of PIA employees and opposition parties who opposed the move that could lead to the privatisation of the airline.

The incumbent government has also decided to lay off half of its 14,000 employees, replace some of its fleet and permanently close loss-making routes in a bid to become profitable for the first time in more than a decade.

Adviser on Reforms and Austerity Dr Ishrat Hussain said the cabinet approved the carrier’s restructuring and has also requested to explore outsourcing management contract or sale of 26% stake in the airline after improving its balance sheet. He said the government is aiming to return PIA to profit by 2023.

Earlier this month, the ECC had approved a restructuring plan of the PIA that includes splitting the entity into two and slashing about 25 percent of the total workforce.

In the ECC meeting, Dr Ishrat Hussain had presented a plan for amortisation of Rs457 billion worth of liabilities by fiscal year 2023. The ECC had approved absorbing about Rs202bn of liabilities as federal government equity in PIA during the current fiscal year.

He had made a detailed presentation on human resource and operational restructuring of PIA and suggested various options for restructuring, including measures to minimise losses and transform PIA into a financially viable entity.

These included human resource restructuring through Voluntary Separation Scheme (VSS), hiring aviation experts, fleet modernisation, routes rationalisation, product development and revenue enhancement measures. The ECC recommended the restructuring plan of PIACL for onward submission to the cabinet.