- ECC approves a Rs457 billion restructuring plan for PIA.
- Adviser to PM Dr Ishrat Hussain says PIA restructuring plan would convert Rs457 billion mortgage into fairness.
- The restructuring plan will likely be applied after getting approval from the federal cupboard.
ISLAMABAD: The Financial Coordination Committee (ECC) on Wednesday gave approval for PIA to launch a Voluntary Separation Scheme (VSS) to put off 25% of its workforce making it round 3,500 staff. It additionally permitted a restructuring plan of Rs457 billion for the nationwide provider.
The assembly permitted Rs330 million for the Ministry of Defence for the upkeep of plane. The restructuring plan will likely be applied after getting approval from the federal cupboard.
The ECC directed the authorities involved to additional effective tune the restructuring plan and reconcile figures earlier than presenting a closing plan earlier than the cupboard.
The PIA required Rs13 billion from the federal government to implement the VSS to put off round 25% of a complete workforce of 14,000, indicating that round 3,500 working workers will likely be relieved beneath the restructuring plan.
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Adviser to PM on Institutional Reforms Dr Ishrat Hussain whereas explaining the ECC resolution mentioned that the PIA restructuring plan will convert the Rs457 billion mortgage into fairness as e-book changes could be achieved in a staggered method to wash the stability sheet of PIA.
He mentioned that the PIA stability sheet was adverse so it requires a restructuring plan on an instantaneous foundation.
Dr Hussain mentioned that there could be no money injections, however the loans and liabilities could be transformed into fairness in a staggered method and PIA could be restructured.
The ECC, which held its assembly beneath the chairmanship of Finance Minister Hammad Azhar, was knowledgeable on Wednesday by means of a abstract submitted from Civil Aviation Authority (CAA) that complete losses of PIA ballooned to Rs457 billion as of 30-09-2020 together with GoP-guaranteed loans of Rs201.8 billion, loans from GoP of Rs55.6 billion, loans on PIA stability sheet of Rs53 billion and mark-up on loans of Rs16 billion. So in totality, the loans and mark-up peaked to Rs326.4 billion.
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The PIA stability sheet additional disclosed that payables to PSO stood at Rs16.4 billion, to CAA at Rs86.7 billion and excellent tax liabilities at Rs14.7 billion. So in totality, the payables to completely different authorities establishments stood at Rs117.8 billion. In totality, the losses of PIA stood at Rs457 billion.
Now the ECC permitted that the GoP-guaranteed mortgage of Rs201.8 billion will likely be transformed into fairness as this excellent quantity will likely be repaid as per the amortisation schedule from the fiscal 12 months 2020-21 to 2026-27.
The excellent loans from GoP to the tune of Rs55.6 billion will likely be settled as e-book entry and loans on the PIA stability sheet of Rs52.9 billion will likely be repaid as an amortisation schedule. The payables to authorities establishments to the tune of Rs117.8 billion will likely be settled topic to settlement amongst CAA, PSO and FBR to waive as receivables. The VSS quantity of Rs12.9 billion has already been permitted by the federal government.
The ECC has been additional instructed that the PIA belongings stood at Rs147.5 billion whereas its liabilities ballooned to Rs457 billion, demonstrating the monetary well being of the nationwide flag provider heading in direction of an entire catastrophe. The present belongings of PIA stood at Rs53.2 billion.
The products retained within the form of complete property, plant and tools have been estimated at Rs82.6 billion and complete non-current belongings of PIA stood at Rs88.9 billion. Different belongings, together with shops and spares stood at Rs2.4 billion, commerce money owed at Rs14.8 billion, advances at Rs1.6 billion, commerce deposits at Rs2.5 billion, brief time period receivables at Rs8.8 billion, money and financial institution stability at Rs8.6 billion and VSS money fee at Rs12.9 billion.
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In line with a press release issued by Finance Ministry after the ECC, the Aviation Division submitted a abstract earlier than the ECC relating to the restructuring plan of the Pakistan Worldwide Airways Company Ltd (PIACL).
The adviser to the PM on institutional reforms and austerity made an in depth presentation on the human useful resource and operational restructuring of the PIACL. He drew consideration to the assorted choices for restructuring and outlined measures to minimise losses and remodel PIACL right into a financially viable entity. It included human useful resource restructuring by means of VSS, hiring aviation consultants, fleet modernisation, routes rationalisation, product improvement and income enhancement measures.
After an in depth session, the ECC advisable the restructuring plan of PIACL for onward submission earlier than the cupboard, after reconciliation of tax legal responsibility figures, with a course to put a cap on future debt which PIACL may take in opposition to its improved stability sheet, as soon as the restructuring plan is applied, the assertion concluded.