PIA – Pakistan International Airlines (PK, Karachi Int’l) survives solely thanks to the government funds it receives, making its financial model unsustainable but also very difficult to change in the short-term, CEO Musharraf Rasool Cyan has said during Supreme Court proceedings related to the proposed privatisation of the Pakistani flag carrier.
According to The Nation, the chief executive has said that the carrier is in need of an “urgent turnaround and strategically-driven business transformation following a decade of mismanagement, corruption and political interference”.
PIA has reportedly accumulated a total of PKR356 billion rupee (USD2.92 billion) in net losses and has only PKR111 billion in assets against PKR406 billion in liabilities.
After lambasting the previous boards for poor decisions, corruption, and mismanagement, and the unions for blocking the necessary changes, Cyan has admitted that a rapid turnaround of the carrier is not possible. PIA is haunted by chronic cash shortages, technical issues causing numerous aircraft groundings, and a combination of massive overstaffing with the lack of qualified staff at certain key positions.
“A large number of our aircraft are grounded due to repair and maintenance issues leading to a massive amount of losses in revenue and increase in the aircraft leasing impact of over PKR6 billion for the year 2017,” Cyan has explained, highlighting his new initiatives aimed at improved utilisation of the fleet and a decrease or even outright avoidance of wet-leases.
He has also heavily criticised the wet-leasing of four A320-200s from VietJetAir (VJ, Hanoi) during Winter 2017/18 season. According to him, the aircraft were in a worse condition than PIA’s own A320s and further deteriorated the already poor public image of the Pakistani flag carrier.
“The turning around of the PIA is a complex task that requires a multitude expertise, skills, capabilities and core competence,” Cyan has said.
It is recalled that the Chief Justice of Pakistan Mian Saqib Nisar asked the carrier in mid-May to provide a detailed report on the financial and operational situation. He also barred PIA from repainting its aircraft unless the carrier could demonstrate that it would be both justifiable economically and would not cause too much operational disruption. The Court has also prohibited the government from selling shares in the flag carrier without prior explicit consent from the court. The Pakistani government had earlier hoped to find a private investor for the currently fully state-owned carrier during the first half of 2018.
Speaking to Dawn, Cyan has added that he is in principle opposed to the privatisation of the carrier and he sees reducing the debt burden as the primary concern for the short term.