Pakistan injects Rs. 17bn to keep crashing airlines afloat

In this file photo, Pakistan International Airlines (PIA) plane taxies before take-off from Karachi International Airport in Karachi on April 21, 2010. (AFP)
Updated 15 November 2018

Pakistan injects Rs. 17bn to keep crashing airlines afloat

  • Continuing liquidity crisis in Pakistan International Airlines (PIA) may lead to grounding of the fleet
  • Rs 17 billion bailout package will keep PIA afloat only for another two months

ISLAMABAD: The semi-state-owned Pakistan International Airlines (PIA) was approved Rs. 17.02 billion by the government in the form of “sovereign guarantees” and other financial aid — a second bailout in the space of six months, the PIA spokesperson confirmed to Arab News on Tuesday.
PIA, a profitable airline which became a burden on the country’s already stressed exchequer, has been dying a slow death for years.
“The government did agree to park the interest till we get some respite,” but since the approved document has not been shared with the airline management, Mashood Tajwar, the struggling carrier’s general manager and official spokesman, was unable to provide further details.
PIA had amassed a colossal debt of $3.33 billion (Rs. 406 billion) up from last year’s $2.92 billion in July, and the fresh bailout from the economic coordination committee headed by Finance Minister Asad Umar is part of Prime Minister Imran Khan’s plan to attempt nursing the airline back to health before considering privatization. Khan also holds the ministerial portfolio for aviation division.
The outgoing government tried to privatize the airline but met legal hitches and criticism over its attempt to sell what once was a national asset and pride of the country.
The national flag carrier has a new chief executive and president appointed by the premier. Umar is optimistic that under the “energetic and enthusiastic” air marshal Arshad Malik, PIA will “experience a turnaround.”
Tajwar clarified that the latest injection or “support” is not necessarily all bailout. He told Arab News that the approval empowers the airline to “borrow from banks” against guarantees from the Ministry of finance. Of the Rs.17.02 billion, Rs.10 billion is sovereign guarantee and a further Rs. 40.8 billion has been allocated in the form of cash for PIA by the ministry.
However, continuous foreign loans taken by the airline have added to its woes and made its situation worse. PIA immediately owes $125.84 million to foreign lenders.The sharp decline of Pakistan’s currency has made debt servicing harder and devaluation further affected the previous financial support package by the government.
In May, the apex court objected and barred the airline from changing livery on its planes to the country’s national animal, the Markhor (the screw horn goat), part of its rebranding and repositioning strategy. The decision resulted in further loss to PIA.
The airline has suffered through operating financially unsustainable routes, grounding of aircraft because of technical problems, overstaffing, incompetent employees, union strikes, inadequate fleet, and wrong strategies. The open sky policy of the government allowed foreign airlines to take a large chunk of PIA’s business, further driving the struggling carrier into the ground.
The airline competition is so fierce that it would take several years before signs of a break even surface, said the spokesperson. PIA is in dire need of strategic planning and quick revenue generation if its management hopes to ward off privatization in the future by the government which is currently optimistic it can help to resurrect it.
But aviation Industry expert Tahir Imran told Arab News that when the airline witnessed a decline in its losses some years ago, it made the fatal decision to increase its passenger capacity by inducting larger aircrafts instead of enhancing its flight frequency by purchasing smaller more efficient and economical aircrafts. This, he said was the final nail in PIA’s coffin.


New Filipino military chief vows to enforce controversial anti-terror law

Lt. Gen. Gilbert Gapay. (Supplied)
Updated 51 min 9 sec ago

New Filipino military chief vows to enforce controversial anti-terror law

  • Gapay said his priority would be to bring an end to the New People’s Army (NPA) — the armed wing of the Communist Party of the Philippines, based primarily in rural areas

MANILA: The new chief of the Armed Forces of the Philippines (AFP), Lt. Gen. Gilbert Gapay, on Monday assumed office with a vow to enforce the country’s recently enacted anti-terrorism law.
The controversial legislation took effect last month, despite legal challenges at the Supreme Court to stop its implementation.
It criminalizes acts that incite terrorism “by means of speeches, proclamations, writings, emblems, banners, or other representations.” The new law also grants authorities broad powers to wiretap and tag individuals and groups as terrorists and detain them without charge for up to 24 days.
“We will capitalize on this very good anti-terror law. It is comprehensive, it is proactive, and it is geared to prevent occurrence of terroristic acts,” Gapay said in his first speech as army chief.
He called on Filipinos to support the military because beside dealing with terrorism and communist insurgency, the country now faced an unseen enemy in the coronavirus disease (COVID-19) pandemic.
The army, he said, was helping the government contain the deadly virus which had infected more than 100,000 people in the Philippines and claimed at least 2,100 lives.

We will capitalize on this very good anti-terror law. It is comprehensive, it is proactive, and it is geared to prevent occurrence of terroristic acts.

Lieutenant General Gilbert I. Gapay, Commanding general, Philippine Army

Gapay said his priority would be to bring an end to the New People’s Army (NPA) — the armed wing of the Communist Party of the Philippines, based primarily in rural areas — and local terrorist groups — Abu Sayyaf, the Bangsamoro Islamic Freedom Fighters (BIFF), and factions of the Daulah Islamiyah — that operate mainly in the country’s south.
“There will be no let up as we continue to be at the forefront confronting all these threats. We are trained for this but still we need the support of other agencies; we need the support of our fellow Filipinos,” Gapay added.
He said the army would continue to collaborate with partner agencies and foreign counterparts in addressing domestic and regional threats, adding that it would suggest provisions to the rules and regulations of the new law to enhance intelligence sharing and strengthen maritime security to deter foreign terrorists from entering the country through its porous sea borders.
Prior to his appointment, Gapay, who replaces the retiring Gen. Felimon T. Santos, Jr., served as the 61st army commander.