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Pakistan International Airlines Corporation to float 15 TFCs worth Rs 15 billion

LAHORE (December 24 2002) : The national flag carrier, Pakistan International Airlines Corporation (PIAC), is all set to float term finance certificates (TFCs) worth Rs 15 billion in the current week to generate revenue required for improving financial health of the airlines.

Secretary Defence and PIAC Chairman, Lieutenant General Hamid Nawaz (Retd) stated this while addressing the stone-laying ceremony of PIAC Complex at new Allama Iqbal International Airport here on Monday.

Hamid Nawaz said that Civil Aviation Authority (CAA); banks and some other institutions had already purchased TFCs worth Rs 9-10 billion.

Now the TFCs are formally being floated some time during this week, he added.

He said the government had promised to provide a total of Rs 36.5 billion to PIAC including Rs 15 billion in shape of TFCs, 9 billion for purchase of new aircraft while the government will also pay Rs 12.5 billion mark-up on TFCs for a period of five years.

So the corporation will have no liability for five years, he added.

Commenting on financial health of the national airlines, he said “when we took over, its financial health was very poor and it had reached on the verge of bankruptcy. No one was ready to fly with PIAC and PSO had declined to provide fuel on credit. Other world suppliers of oil also sent us notices to bring cash to get the fuel supply.''

The overall state of affairs in airlines was very dismal. In 1999, its annual loss was Rs 5 billion while the loss figure for the year 2000 stood at Rs 5.3 billion.

Its two and half years total loss stood at Rs 13 billion, portraying a baffling state of affairs of the national carrier, he revealed.

Since 1991, no new aircraft was inducted into the PIAC's fleet, he maintained. “We had asked the government that we needed Rs 20 billion to avoid bankruptcy, while the government has so far provided us Rs 4.7 billion for bridging financing'', he said.

The new management of the corporation, he maintained, endeavoured hard to get it out of deficit and managed to turn it into a profitable entity.

In 2002, PIAC earned a record profit of Rs 2.5 billion as compared to Rs 750 million in the year 2001.

“In a short period of one and half year, we made the corporation a profit earning institution. Our target for the year 2002-03 is Rs 3.5 billion profit, which we pledge to achieve,'' he informed.

Incidentally on small domestic routes which are called `socio-economic routes' we lost revenue. On these routes, PIAC is losing Rs 700 million annually. During the last 10 years, it has lost Rs 4.5 billion on these small routes.

Giving details of the dues, he informed that PIAC, out of Rs 6 billion dues, paid Rs 3 billion to CAA in the current year, while it is paying Rs 170-180 million per month to the authority.

The Secretary Defence, who is also chairman of CAA, further said “updating the fleet was the top priority of PIAC, adding an agreement with a company has been signed and the first aircraft will be delivered to the airline during next year while another two will arrive by 2006.

By the year 2008, all new aircraft will be inducted into the fleet.

“After we get new aircraft, we will take passengers non-stop wherever they will want in the world. Currently, PIAC had 3-4 hours duration's edge over other world airlines on international routes.

To a question he said arrival of new airlines will not affect revenue of the corporation, adding new airlines are requirement of the new terminal.

He did not agree with a questioner that the salaries of PIAC's directors were very high, and added these were low to the extent that no one from outside was willing to work as director.

About raise in pay of other employees he said on the eve of Eid, the airline has paid bonus to all the employees to the tune of Rs 200 million.

However, the salaries may be revised after the corporation earns more profits. The management will also consider the case of contractual employees after purchase of new aircraft.

About posting of PIAC officials abroad he said all postings were being made on merit and recently out of total 750, 240 officials have been called back.

Talking about the PIAC complex, he said it, spreading over an area of 68,000 sq.feet will cost Rs 120 million and will have a number of facilities, including technical ground support, meal service section, engineering base, parking, administration block, medical centre, prayer room.

It will be ready by April 20, 2003. A cargo complex having capacity of handling 58,000 tonnes of cargo per year has already been completed.

PIAC Managing Director Chaudhry Ahmed Saeed, Director Cargo Wasim Bari, GM (Punjab Zone) Lieutenant Colonel (r) Talat Omer, District Manger S S H Bilgrami, Project Director of the new terminal Brig Tauseefuzaman and other officials were present on the occasion.

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