PIA - Unfortunate-much needed - Privatization
Nostalgia
can be additive. It is hard to imagine an airline which was once run by Air
Marshal Nur Khan, under whose exemplary leadership PIA was portrayed as the
Ambassador of the nation is now edging towards privatization.
PIA
not only helped Emirates & likes of Singaporean airlines to spread its
wings but also owns the famous Roosevelt Hotel in Manhattan where several
movies like Wall Street, Maid in Manhattan, Men in Black and The Dictator have
been shot.
What
went wrong?
Although
there are lot of reasons for PIA’s downfall, but for me the negative numbers
and accumulated losses in the balance sheet are results and not causes of the
failure.
With
pilots found drunk, crew members smuggling mobile phones, ghost employees who
get paid for nothing, political recruitments, poor planning, interference from
the govt and the elite class which travels business and uses privileges at a
feeble cost are all to be blamed for this. There is no reason for the hue and
cry for an ailing elephant close to its fall.
It
is hard to imagine that an airline with merely 26 operational aircrafts
supports a staff of 16,600 regular and 2,700 contractual employees. With 742
employees per operational aircraft, PIA is perhaps the world’s least efficient
airline. No wonder the airline was running losses up to 3 billion rupees each
month. In comparison, Air India with 27,000 employees for a fleet of 122
aircrafts carried 221 employees per aircraft. Several western airlines have
fewer than 20 employees per operational aircraft.
Nawaz
government seems to be following the Kenyan model. In 1994, the Kenyan
government had sold 26% stake to a strategic partner and by the year 2000 it
had doubled its passengers and cargo and started recording profits.
I
strongly feel after the 26% stake in PIA is sold to an ‘unknown strategic
partner’, the real story will begin which will be a turnaround for the national
carrier. In the second stage, the GOP might manage an IPO which will be quite
attractive for the Gulf and Pakistani financial institutions and the government
might maintain 10-20% stakes in the airline. PM Nawaz recently spoke about employees
being rewarded for not falling prey to the trade unions and reporting to work
so there is a hint of 3-5% of stake for PIA employees who support this stance
of the government.
Unfortunately, turning the table and making PIA profitable is not a possible
task for the current government as the mess is huge. The objective here is to
transfer this ‘burden’ on tax payers’ money to a taxable source of income for
the GOP. The extra baggage needs to be offloaded!
