- Supreme Court orders airline audit as losses soar above $3 billion
- Total debt repayment and US $1.6 billion can save the airline, says PIA
ISLAMABAD: Pakistan International Airline’s (PIA) troubles deepened Saturday after the Supreme Court order to the country’s Auditor General (AGP) to complete a mammoth detailed audit of the carrier which has sustained losses in hundreds of billions of dollars over a decade within ten weeks.
The directive was passed by the Chief Justice of Pakistan, Mian Saqib Nisar, who was spearheading a two-member bench at a court hearing on PIA’s desire to sell some of its assets-turned-liabilities to generate much-needed funds against its burgeoning debt.
The airline has been surviving on an annual state grant of $106 million (Rs.13 billion), media reports suggest, and has amassed a colossal debt. Its current losses stand at $3.33 billion (Rs.406 billion), up from last year’s $2.92 billion (Rs.356 billion), according to a report submitted by PIA’s defense counsel in court.
“The matter is under judicial consideration, therefore I cannot offer comment” on the court’s order for an audit, said Mashhood Tajwar, a PIA spokesperson, to Arab News. But he said the corporation’s audit is a “regular feature” and an ongoing process, adding that the AGP has an office in PIA’s building.
“The government has extended the facility of sovereign guarantees (to take bank loans) not subsidy,” said Tajwar, rejecting media reports and assertions that the airline has been running on taxpayers’ money.
Nisar took suo moto against the airline in April and summoned all its former managing directors to appear before the court over continued losses stretching back ten years, expecting to unearth irregularities and misappropriations that led to PIA’s downfall, Tajwar explained.
The outgoing government tried to privatize the airline but met legal hitches and criticism over its attempt to sell what once was a national asset and pride of the country.
In May, the apex court objected and barred the airline from changing livery on its planes to the country’s national animal, the Markhor known as the screw horn goat, part of its rebranding and repositioning strategy. The decision further added to the ballooning loss of PIA, said industry experts.
Aviation industry expert Tahir Imran told Arab News that the audit is unlikely to reveal ground-breaking irregularities and misappropriation of funds or anything previously unknown.
He said the national carrier’s problems stem from political interferences, union influences, legal issues, and the open sky policy which have mostly been the pivotal factors behind its failure.
The airline has also suffered through operating financially unsustainable routes, grounding of aircraft due to part problems, overstaffing, incompetent employees, union strikes, an inadequate fleet, and wrong strategies. The open sky policy of the government allowed foreign airlines to take a large chunk of PIA’s business, further driving the struggling carrier into the ground.
The competition is so fierce that it would take several years before signs of a break even surface, said Tajwar.
But Imran pointed that when the airline witnessed a decline in its losses some years ago, it made the fatal decision to increase its passenger capacity by inducting larger aircraft rather frequency by purchasing smaller, more efficient and economical aircraft. This, he said, was the last nail in PIA’s coffin.
There are “signs of improvement,” claims the senior PIA official. The new management has stopped “further deterioration” and closed “loss routes.”
“Domestically we have recaptured the market” but “shortage of fleet” and cumbersome “liabilities” affect progress.
“Let PIA work independently for four to five years, wipe out our debt, and give us $1.6 billion (Rs.200 billion) to turn PIA around,” said Tajwar.