Govt plans number of steps to make PIA profitable

PIAISLAMABAD: To make the national flag carrier Pakistan International Airline (PIA) as profitable organisation, the government has taken a number of measures, sources told Media.

With the implementation of these measures, the PIA would be able to make profit instead of going down with losses. The following major steps have been taken to improve efficiency and reduce costs:Financial Cost, Exchange Loss Reduction: The government is reviewing the fleet loans as well as working capital financing cost and wherever possible, the interest rate reduction is being planned. Recently, the government has issued rollovers and allowed PIA to get fresh loans whenever needed. The PIA has proposed a Business Development Plan, which has already been furnished to Finance Division for necessary action.

Human Resource: The sources claimed that large number of human right (employees) is also one of PIA’s problems that needs right sizing. Currently, there are 497 people are working for one PIA passenger aircraft, which is the highest in the world. In this regard the government and top management of the PIA has HR rationalisation plan, which would be employed with the aim of making every employee contribute to the growth of the company. Under the HR policy, the government plan no reduction of manpower to take place in operational areas of pilots, aircraft engineers, technicians and specialized professionals. However, there will be reduction in non-operational areas through normal attrition, while outsourced positions over and above the HRB will either be adjusted against the approved HRB or eliminated. Stagnation due to similar type of duties will be done away with the introduction of job rotation policy.

Engineering MRO Project: The sources also claimed that the PIA has a highly skilled engineering human resource base, which is licensed and well trained. Per man-hour rates are competitive by industry standards.These trained human-forces have an added advantage of strategic location. These ingredients can make the PIA engineering a potential MRO outfit in this region. It has been planned that necessary investment in infrastructure, training and tooling is to be made towards the achievement of this target. This MRO, once established, will not only service the PIA fleet but also earn third party income for PIA. Similar initiative for Landing Gear has also been started.

The Enterprise Resource Planning (ERR): Enterprise Resource Planning is a tool used to integrate the data and processes of an organisation into one single system using many components including hardware, software, a unified database, etc, an ERP system streamlines and integrates different functional areas within an organisation to ensure proper communication, productivity and efficiency. The PIA currently does not have such a system and preliminary work has been initiated to conduct a study and prepare a road map for implementation of an ERP.

The Board, as well as management, stays committed, firmly, and steadily, to the path of recovery. They acknowledge full support of government, employees, PIA valued customers, bankers and other stakeholders. They are confident that measures taken to contain the loss situation will bring about sustainable improvements in the near future.The steps mentioned earlier to improve the financial health of the PIA are of long-term nature and impact of all the steps cannot be measured over a short period of time, like one year.

Furthermore the turnaround strategy of the corporation is a two pronged strategy based on internal changes, initiatives and balance sheet restructuring which requires the continued government support. The business plan is at present under active consideration of Ministry of Finance. However some of the impacts of their strategies are:

Fuel: During financial year 2010 the PIA was able to save $ 2.45 million on account of effective hedging as allowed by the Board of Directors.Expensive Contracts: Global Distribution system (GDS) contract was reviewed and revised in which booking cost per segment was reduced. As a result total cost in financial year 2010 was under budget by 5.6 percent.Revenue Enhancement: During the financial year 2010 the Corporation achieved its highest ever revenue in excess of Rs 107.5 billion as compared to Rs 95.5 billion in the year 2009, despite the disruption in flights due to the volcanic eruption in Europe and strikes that took place in 2010. PIA also made operational profit during the financial year 2010. – Dailytimes