VSS availed by 2,000 PIA employees to cost govt Rs5 bn
ISLAMABAD: The Voluntary Separation Scheme (VSS) availed by 2,000 employees of Pakistan International Airlines will cost around Rs5 billion to the federal .
However, the PIA spokesperson claims the VSS will save Rs 2.5 billion annually, because the ensign carrier is paying this amount to the retiring 2,000 employees in terms of salaries and other perks and privileges.
Adviser to the Prime Minister on Institutional Reforms and Austerity Dr Ishrat Hussain told The News that PIA’s Board had sent a strategic business decide to the federal . As per the business plan, the PIA board had recommended the national airline to scale back the workforce up to 7,500 employees.
“The ECC has already approved the Voluntary Separation Scheme (VSS). After the federal government’s approval, the VSS was offered to the workers . The board has presented a comprehensive restructuring plan for PIA consistent with which the ensign carrier has got to reduce the amount of employees up to 258 per aircraft. Also the board has presented plans for exiting from the routes in loss,” Dr Ishrat said.
PIA Spokesperson Abdullah Hafeez told this scribe the aircraft to employees’ ratio of the national airline is way above the other airline. Currently, PIA has around 500 employees per aircraft. The VSS will help PIA save an outsized amount of cash annually because the airline is paying an enormous amount in terms of salaries and other perks and privileges to those employees.
Many top airlines within the world outsource certain services, including passenger or cargo reservations systems, gate operations, ground handling and catering, etc. except for PIA of these services were administered through in-source. However, with the rising debts and liabilities of the ensign carrier, the board has chalked out a comprehensive business decide to take the airlines out of this quagmire, the spokesperson said.
“Currently, PIA is under almost Rs480 billion debt and liabilities and this amount is increasing with every passing day. Keeping this humongous liabilities amount in sight the board has presented two options in its business decide to the federal .
According to this plan, the board has proposed that the PIA management will make sure the operational profitability of the national airline.
Whereas, the second a part of the proposed plan is that the federal should pay off the legacy loan or help in restructuring the balance-sheet because all the debts and liabilities are under a sovereign guarantee. the quantity of the ensign carrier’s debt is so high that PIA itself cannot pay off the loan albeit it starts earning take advantage of 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'll take another 100 years to pay off its liabilities. this is often why the board has proposed the federal to play its role in paying off the national airlines debts”, said Mr Hafeez.
According to the PIA spokesperson, the business plan for the ensign carrier was chalked out by the top of 2018. The PIA management had consulted Idris Jala --- the person behind Malaysian Airline transformation. He had recommended conducting route diagnostic labs and enhancing the ancillary revenues of the airline. Keeping his recommendation in sight , the PIA management has enhanced the ancillary revenues whereas the routes in loss have also been identified. thanks to these steps, the PIA revenue was increased and operational cost decreased in 2019, he said. “The ensign carrier has almost 14,000 employees. consistent with the business plan proposed by the PIA board, the amount 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 the letters. Similarly, almost 960 employees were dismissed on disciplinary grounds last year whereas; around 600 employees retire per annum after completing their tenures. The PIA now will have around 7,500 to 8,000 regular employees and almost 2,200 daily wagers. The reduction employed size will help reduce the operational cost of the national airlines,” commented the spokesperson.
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