PIA spending Rs1 bn a month as interest on loans, PAC told

ISLAMABAD: The Public Accounts Committee was informed Monday that the cumulative losses of the Pakistan International Airlines (PIA) have touched Rs193 billion and its debt burden is Rs161 billion, and the airliner is paying Rs1 billion interest every month on loans.
The PAC held its meeting Tuesday under the chairmanship of Syed Khursheed Shah in which the audit paras relating to Aviation Division for the financial year 2010-11 were examined.
The Aviation officials claimed success in reducing the losses as last year PIA suffered a loss of Rs42 billion while during the current financial year the losses will be reduced to Rs15 billion and it is estimated that next year they will further reduce to Rs10 billion. Managing Director PIA Shahnawaz Rehman told the committee that PIA’s capability of earning profit was increasing gradually.
He said Rs31 billion were spent on the purchase of ATR planes while other expenditure amounted to Rs130 billion. He said the PIA suffered a loss of Rs24 billion in 2008 due to change in foreign exchange rate.
Chairman PAC Syed Khursheed Shah observed that the PIA has availed the credit and now the same amount was being paid as interest on loans.Secretary Aviation Division Muhammad Ali Gardezi, who is also chairman PIA, said it was easier to acquire a plane on lease than purchasing it.
He told the committee that the new business plan of PIA has been prepared and revenue could not be increased unless PIA acquired new planes.He said the PIA suffering a loss of Rs3 billion every month and two of its six ATR planes were grounded. “There is no money to purchase the spare parts and out of 6 Airbus 310, 3 were grounded while remaining will be sold to purchase ATR planes.
PAC member Chaudhry Pervez Elahi sought briefing on short-term and long-term strategies to pull the national flag carrier out of losses. Chairman PAC directed the Aviation Division to give detailed briefing to the PAC in its next meeting.
The Audit officials told the committee that PIA was suffering a cumulative loss of Rs193 billion and under these circumstances it seems difficult for the PIA to get a new fleet of planes.
Giving the example of Pakistan Railways, the audit officials told the committee that Rs3 billion were being paid monthly under the heads of salaries and pension.
Syed Khursheed Shah observed that if the government owned the legacy loans of PIA then it could come out from the losses.
Secretary Aviation Division Muhammad Ali Gardezi told the committee that politics in the PIA in the shape of Unions was the main hurdle in taking the business related decision.
Chairman PAC directed Secretary Aviation Division to present details of expenditures made on Grade 1 to IV of the PIA employees who took part in the union activities.
In reply to a question by PAC member Junaid Anwaar Chaudhry about political inductions in PIA, Muhammad Ali Gardezi said that the ground handling, technical support, flight kitchen, maintenances and repairing, Speedex and training centers were outsourced but the PIA itself is doing this work and Rs5 billion were spent on these services and 7,000 employees were employed in these departments.
He told the committee that for 26 planes 18,336 employees were working and plane-to-employees ration is 690 while elsewhere this average is between 120 to 170 employees.
The audit department told the committee that the salaries of employees were enhanced by 50 percent in one year while the strength of executive officers of PIA was doubled, which that further increased the losses.