PIA to split into two companies- Why So?

Splitting PIA is the only solution to its revival- Ishrat Hussain

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In a Federal cabinet meeting on Wednesday, Adviser to Prime Minister on Institutional Reforms and Austerity, Ishrat Husain, has suggested splitting the Pakistan International Airlines (PIA) into two companies for its revival.

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Splitting PIA- Why so?

Ishrat Hussain claims that splitting the National Airlines into two companies is the only viable solution. Moreover, he said that it will create a new core business operating company without any debt. He also suggested establishing a non-core company to park all liabilities and debt.

No doubt that PIA has its strengths as well. Such as rights over lucrative routes, secured during its golden years, and splitting the airline into two will provide it a fair chance of revival.

He proposed to the PIA to target 900,000 Pakistani expatriates and encourage them to travel through the national airline. Through this, PIA can generate an ample amount of revenue.

The poor condition of PIA

The cabinet meeting was attended by the PIA Chief Executive Officer, Arshad Malik.

While meeting, the CEO of National Airlines highlighted several factors behind PIA’s losses over the years. That includes old aircraft usage with poor seating arrangement, no entertainment system, unprofitable destinations, overstaffing, union activities, and corruption.

Moreover, PIA CEO revealed that

The total debt of the airline stood at Rs. 400 billion with annual interest payments of Rs. 24 billion.

Airline management has introduced a segregation scheme for 4,000 non-core employees and a voluntary separation scheme (VSS) for 3,000 employees to overcome overstaffing. The scheme will cost Rs. 12.87 billion with payback in two and a half to three years.

Read Also: PIA Terminates over 700 Employees with Fake Degrees

Earlier, a similar proposal was made to Public Accounts Committee by Secretary Aviation Division Muhammad Irfan Ellah in a briefing on PIA, while Syed Khurshid Shah headed the committee meeting.

The proposal suggests that flight operation, cabin and cockpit crew, finance, IT, and admin departments will remain under PIACL control. Whereas other departments like engineering will be under PIACL, and the remaining sectors, including maintenance and repairs, as well as, overhauling will be privatized.

Even in 2014, Mohammad Zubair told Reuters in an interview during a visit to New Delhi.

“Pakistan plans to split ailing national flag carrier PIA into two companies and sell control of the core business to a global airline over the next 18 months.”

Moreover, he revealed the names of the buyers like Emirates Airlines, Etihad, and Qatar Airways.

Stay tuned to Pineapple Pakistan for more updates.

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