20/11/2008
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PIA likely to jettison 5,000 employees
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Airline to pledge 2 hotels to raise funds
Monitoring Desk
KARACHI: Flagship carrier Pakistan International Airlines Corp which is trapped in a financial air-pocket plans to generate Rs30 billion ($379 million) by pledging two hotels. Moreover at least 5000 jobs would also be jettisoned, reported a foreign news channel.
``We are an organisation no one wants to invest in,'' Managing Director Mohammad Aijaz Haroon told the news channel.
The airline's Roosevelt Hotel in New York and Hotel Scribe in Paris will be put into a new business, which state-owned companies will be invited to invest in, he added.
The airline also plans to slash 5,000 jobs, or 28 per cent of its workforce, by shifting workers to outsourcing companies after failing to get an injection from Pakistan's cash-crunched government. The carrier, which is 88 per cent state-owned, is also combating higher fuel costs and a globalrecession-led business slump. ``There are no prospects for this airline,'' said Habib-ur- Rahman, CEO Atlas Asset Management Ltd. ``It's a white elephant and government should examine its viability and wind it up.'' PIA posted a loss of Rs38.4 billion in the first 9 months compared with Rs10.9 billion a year earlier. The flag carrier hopes to obtain approval for the hotel plan next week, Haroon said. Investors will receive a guaranteed rate of return from the hotels, which are worth more than Rs60 billion, and the carrier would pledge to buy them back in about five years, he added. The money raised will be used to partly pay off the airline's short-term debts amounting to Rs55 billion, said Haroon.
The airline will shift employees to outsourcing companies to manage operations such as catering and ground services, Haroon said. The airline has 18,000 employees now.
National carrier this year hedged fuel for the first time and plans to hedge as much as 30 per cent of its fuel needs. PIA is mulling over expansion of its fleet to 59 aircrafts by the end of 2010 from 40.
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