Pakistan Govt Has to Pay Rs5b For 2,000 PIA Employees Availing VSS
- VSS availed by 2,000 PIA employees to cost government Rs5 billion
- PIA says scheme will save Rs2.5 billion annually
- PIA spokesperson shares business plan of national carrier presented to the federal government
ISLAMABAD: The federal government has to pay Rs5 billion for the 2,000 employees of the Pakistan International Airlines availing the Voluntary Separation Scheme.
But PIA says the scheme will save Rs2.5 billion annually since it is paying this amount to the retiring 2,000 employees for salaries and other perks and privileges.
What is PIA's proposed business plan?
PIA’s Board had sent a strategic business plan to the federal government recommending PIA reduce its workforce up to 7,500 employees, Adviser to the Prime Minister on Institutional Reforms and Austerity Dr Ishrat Hussain was quoted as saying by a report in The News.
Dr Ishrat said the ECC has already approved the VSS. The scheme was offered to PIA employees after the federal government’s approval.
"The PIA Board's plan said the national carrier has to reduce its employees up to 258 per aircraft. It also presented plans to exit from routes that are making losses,” Dr Ishrat said.
The aircraft to employees’ ratio of the national airline is far higher than any other airline, PIA spokesperson Abdullah Hafeez was quoted as saying by the publication.
Currently, PIA has around 500 employees per aircraft. The VSS will help PIA save a large amount of money annually because the airline is paying a hefty sum in salaries and other perks and privileges.
Outsourcing services is common among many top airline in the world, including passenger or cargo reservations systems, gate operations, ground handling and catering, etc.
PIA has been doing all this in-house.
The PIA spokesperson said the national carrier is under almost Rs480 billion debt and liabilities and the amount is increasing daily.
So the board has proposed two options: the PIA management will ensure operational profitability and federal government should pay off PIA's legacy loan or help in restructuring the balance-sheet because all the debts and liabilities are under a sovereign guarantee.
"The volume of the national flag carrier’s debt is so high that PIA itself cannot pay off the loan even if it starts earning profit from its operations”, the spokesperson said.
“The average revenue of PIA is around Rs150 billion out of which an amount of Rs6 billion is its operational profit.
Even if PIA starts paying its loan from its operational profits, it will take another 100 years to pay off its liabilities. This is why the board has proposed the federal government to play its role in paying off the national airlines debts,” said Hafeez.
Who made the business plan?
This business plan was made by the end of 2018. The PIA management had consulted Idris Jala - the man behind the transformation of Malaysian Airline.
Jala had recommended conducting route diagnostic labs and enhancing the ancillary revenues of the airline.
The PIA management enhanced the ancillary revenues whereas the routes in loss have also been identified.
Due to these steps, the PIA revenue was increased and operational cost decreased in 2019, the spokesperson said.
How does the VSS scheme work?
The national flag carrier has almost 14,000 employees. According to the business plan proposed by the PIA board, the number of employees was to be reduced to 7,500.
Currently 2,000 employees have applied for the VSS out of which around 1,000 employees have already been sent letters.
Similarly, almost 960 employees were dismissed on disciplinary grounds last year while 600 employees retire every year after completing their tenure.
The PIA will now have around 7,500 to 8,000 regular employees and almost 2,200 daily wagers. The reduction in employment size will help reduce the operational cost of the national airlines, the spokesperson said.
0 Comments