- ECC allows PIA to lay off 25% of workforce.
- ECC authorizes a Rs457 billion restructuring plan for PIA.
- Adviser to PM Dr Ishrat Hussain says PIA restructuring plan would transform Rs457 billion financing into equity.
- The restructuring plan will certainly be executed after obtaining authorization from the federal cupboard.
ISLAMABAD: The Economic Sychronisation Board (ECC) on Wednesday provided authorization for PIA to launch a Volunteer Separation System (VSS) to lay off 25% of its workforce making it around 3,500 employees. It also accepted a restructuring plan of Rs457 billion for the national carrier.
The conference approved Rs330 million for the Ministry of Defence for the upkeep of aircraft. The restructuring plan will be executed after obtaining authorization from the federal cabinet.
The ECC routed the authorities concerned to further tweak the restructuring plan and integrate numbers before presenting a final plan before the cabinet.
The PIA called for Rs13 billion from the federal government to apply the VSS to let go around 25% of a complete workforce of 14,000, showing that around 3,500 working staff will be eased under the restructuring strategy
Consultant to PM on Institutional Reforms Dr Ishrat Hussain while discussing the ECC choice stated that the PIA restructuring strategy will certainly convert the Rs457 billion finance right into equity as publication adjustments would be carried out in a staggered manner to cleanse the annual report of PIA.
He stated that the PIA balance sheet was negative so it requires a restructuring intend on an instant basis.
Dr Hussain stated that there would be no money shots, but the lendings and obligations would certainly be converted into equity in a staggered manner and PIA would certainly be restructured.
The ECC, which held its conference under the chairmanship of Finance Priest Hammad Azhar, was informed on Wednesday through a summary submitted from Civil Aeronautics Authority (CAA) that total losses of PIA swelled to Rs457 billion since 30-09-2020 including GoP-guaranteed financings of Rs201.8 billion, car loans from GoP of Rs55.6 billion, car loans on PIA balance sheet of Rs53 billion and also mark-up on car loans of Rs16 billion. So in completeness, the car loans and mark-up peaked to Rs326.4 billion.
The PIA balance sheet additionally revealed that payables to PSO stood at Rs16.4 billion, to CAA at Rs86.7 billion as well as outstanding tax obligation obligations at Rs14.7 billion. So in completeness, the payables to different government institutions stood at Rs117.8 billion. In completeness, the losses of PIA stood at Rs457 billion.
Currently the ECC authorized that the GoP-guaranteed lending of Rs201.8 billion will certainly be converted into equity as this impressive quantity will certainly be paid back as per the amortisation schedule from the fiscal year 2020-21 to 2026-27.
The impressive car loans from GoP to the tune of Rs55.6 billion will certainly be settled as book entrance as well as car loans on the PIA annual report of Rs52.9 billion will certainly be paid back as an amortisation schedule.
The payables to federal government organizations to the tune of Rs117.8 billion will certainly be resolved based on contract among CAA, PSO and also FBR to waive as receivables. The VSS amount of Rs12.9 billion has currently been approved by the government.
The ECC has actually been additional informed that the PIA assets stood at Rs147.5 billion while its obligations swelled to Rs457 billion, demonstrating the financial health of the national flag carrier heading in the direction of a total catastrophe. The existing possessions of PIA stood at Rs53.2 billion.
The goods maintained in the form of total building, plant and tools have been estimated at Rs82.6 billion and complete non-current properties of PIA stood at Rs88.9 billion.
Various other possessions, consisting of stores and spares stood at Rs2.4 billion, profession financial debts at Rs14.8 billion, advances at Rs1.6 billion, profession down payments at Rs2.5 billion, short term receivables at Rs8.8 billion, money and bank balance at Rs8.6 billion as well as VSS money repayment at Rs12.9 billion.
According to a statement released by Finance Ministry after the ECC, the Air travel Division sent a recap prior to the ECC concerning the restructuring plan of the Pakistan International Airlines Company Ltd (PIACL).
The advisor to the PM on institutional reforms and also austerity made a detailed presentation on the human resource as well as operational restructuring of the PIACL.
He drew attention to the numerous options for restructuring as well as described steps to reduce losses as well as transform PIACL right into a financially viable entity.
It consisted of human resource restructuring through VSS, working with aeronautics professionals, fleet modernisation, routes rationalisation, item growth as well as revenue enhancement procedures.
After a thorough appointment, the ECC recommended the restructuring plan of PIACL for forward entry before the cabinet, after settlement of tax obligation liability numbers, with a direction to position a cap on future debt which PIACL can take versus its improved balance sheet, when the restructuring plan is applied, the statement wrapped up.