PIA May Rise Again – Research Snipers

PIA May Rise Again

As it is already in the news that the Pakistan International Airlines (PIA) management has already decided upon a plan to hand over its some significant assets like Roosevelt Hotel—New York and Scribe—Paris to the creditors in an attempt to pay off the liabilities of rupees three hundred and fifty-two billion and to restore the airline’s career financially.

The CEO has forwarded the business plan for review to the federal government, emphasizing on two options for bringing a change to the wealth of the national flag carrier. The first option is for transferring the two mentioned assets Roosevelt and Scribe to the government clearing liabilities amounting rupees 352 billion out of 406 billion rupees.
After an anticipated turnaround by 2022, the airline’s capitalization would reach a point where the government would be in the position to recover its investment.

As for the second option so it was proposed that the government may pick debt servicing costs of rupees 59.334 billion and rupees 49.98 billion for the years 2018 and 2019 respectively for providing a financial gap between the two years. In the coming years, PIA would be able to beat the debt servicing costs.

According to the management of the national flag carrier, the airline’s fleet would be increased from the current thirty-six aircrafts to forty-four airplanes by 2022.

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PIA has suffered majorly in past because of the bad decisions of the airline’s management. Yet again this decision is questionable as two important hotels are being considered for selling just so someone may make money.

For instance, consider the airline’s decision of shutting down the New York route which generated rupees 1,074 million during the span of January- July 2017, while the operating cost is rupees 1,764 million. There is a lag of rupees 690 million but was it enough for the airline to decide on completely closing such an important route.

The main reason for the loss in profits of Pakistan is because of the reduction in PIA’s share of Pakistani traffic annually from Pakistan which was 8 million in the early nineties and was reduced to 5.6 million in 2015 and currently is 4.3 million passengers.

The decline began in 1992 when Open Skies Policy was introduced by Nawaz Sharif government which replaced the Bilateral Traffic Rights Agreements. This uni-sided grant of traffics benefited the Gulf-based airlines.

It is high time to hand over the Pakistan’s national flag carrying airline to some professional management. The airline has suffered enough because of the political interferences. The Prime Minister cannot seize the airplane at his personal choice and neither the ruling party could manipulate or decide its fate as per their personal interests.

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