President orders PIA bailout

ISLAMABAD " President Asif Ali Zardari Friday advised the government to consider making strategic investment in building fuel storage capacity and advance purchase of fuel oil to help bail out the PIA from its financial woes.
This he said during the briefing on PIA in a meeting in the Presidency that was jointly presided by the President and the Prime Minister.
The meeting was attended by Ch. Ahmed Mukhtar, Federal Minister for Defence, Sardar Aseff Ahmed Ali, Deputy Chairman Planning Commission, Capt. Muhammad Ijaz Haroon, Managing Director PIA and officials of relevant ministries and PIA were also present in the meeting.
The President said that the government could consider hiring the services of consultants to suggest workable plans for strategic investment in the PIA through public-private partnership.
The fund raising efforts for the PIA required innovative and non-traditional solutions as the problem was too big for normal bureaucratic procedures and periodic dole outs, he said.
The President advised the government to also consider developing the Roosevelt Hotel property in New York owned by the PIA as a source of permanent income without actually selling the property and retaining its ownership by the PIA.
He said that the government might revisit the earlier decision to place the Roosevelt Hotel under the Privatization Commission so as to examine the possibility of developing the property for regular income.
The President said that the PIA could be salvaged through out of box solution and advised the government to have separate smaller meetings of experts on evolving a workable business plan.
Giving briefing on the PIA the Managing Director Capt. Muhammad Ijaz Haroon of the Airline said that the PIA had 40 airplanes in its fleet operating to 23 domestic and 35 international destinations and employing over 17,000 employees. He said that the average age of an aircraft was 13 years but more than half of the PIA fleet was over 23 years old.
The MD PIA said that the airline industry worldwide had suffered huge setbacks due to volatility in the fuel prices. The projected profit of 9.6 billion dollars of the industry in June 2007, turned into loss of over 6 billion dollars by June 2008, he said.
The meeting was informed that although fuel prices had come down, PIA still faced a difficult situation due to many other challenges. Poor governance in the past ignoring best industry practices, aging aircraft, capacity glut, rupee depreciation and geopolitical situation were factors that posed challenges to the airline.
The meeting was informed that the airline had focused to improve the equation between revenues and costs during 2009. He said that marketing had been geared to maximize revenues and thereby restore profitability. The overall seat factor was also planned to be higher this year than in 2008. The meeting was informed that a 14% increase in capacity is planned which would also improve the revenue growth considerably.
About the improvement in services the MD PIA informed the meeting that the facility of online booking had now been extended to more destinations and the list would be expanded further. The reservation system had also been streamlined besides introducing courtesy and customer care training for the front line staff, he said.
Prime Minister Syed Yousuf Raza Gilani observed that the problems and issues faced by the PIA could not be resolved through periodic injections of financial dole outs. He said that the government would take a fresh look at the issues involved to find out a lasting solution. The Prime Minister said that he would hold a separate meeting with the Defence Minister and Advisor Finance and relevant officials to sort out the PIA problems.