Pakistan’s Federal cabinet has given in-principle approval for Pakistan International Airline’s restructuring, where company will be split into two entities. One entity will retain the operational parts of exisiting PIA, while other entity will be carve out to park accumulated losses.
As per the restructuring terms, PIA will lay off half of its Workforce of 14,000. PIA currently has 30 planes and the highest Plane-to-Staff ratio. PIA will deploy human resource restructuring through Voluntary Separation Scheme (VSS). Around 2,000 employees have already taken voluntary separation schemes.
Prime Minister’s Adviser on Reforms and Austerity Dr Ishrat Hussain presented the restructuring plan for the PIA. It was also decided that out of Total Loans/liabilities of PKR 457 billion Government will absorb PKR 202bn of liabilities as federal government equity in PIA during the current fiscal year as a non-cash transaction.
The restructuring proposal also suggested hiring aviation experts, fleet modernisation, routes rationalisation, product development and revenue enhancement measures in order to bring PIA into profit by year 2023. PIA will not fly loss making routes any more and will maintain its plane inventory below 30.
PIA has suffered net loss of PKR 34.6 billion during 2020.
The restructuring proposal further suggested sale of 26% stake in the airline after improving balance sheet of PIA.
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