NICHOLAS IONIDES / SINGAPORE
Pakistan International Airlines (PIA) is seeking to raise Rs20 billion ($319 million) as part of a "rescue package" approved by the government aimed at keeping the struggling national carrier from collapse.
PIA says that under the package, approved by Pakistan's military ruler, Gen Pervez Musharraf, it will work with the Ministry of Finance to raise the funds "to meet its financial obligations and liabilities and maintain its operations".
"The package approved for the airline includes the lining up of the much-needed funds to keep the cash-strapped airline flying," the airline says. The government is expected to help arrange loans, which it will guarantee.
Admitting that it is at a "critical stage", the airline says it has also won approval to revamp its international and regional route network, link domestic fares with fuel prices and rationalise fares for some of the "socio-economic" routes it is forced to operate despite losses.
"These measures have been wrapped up in a new business plan, which aims at eliminating losses, reducing expenditure and increasing revenues," PIA says, adding that it suffered a loss of nearly Rs2 billion in the first half of this financial year. "The new business plan projects a break-even situation within a year, followed by gradual but steady increase in profits in the subsequent years."
The rescue package allows the airline to suspend the activities of unions and associations. PIA says there will be no staff cuts but it will work to improve productivity and efficiency among its 22,000 employees. It also will outsource most of its non-airline functions.
Source: Flight International
