Secretary Aviation Asked to Submit Business Plan to Make PIA a Profitable Airline

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Secretary Aviation Asked to Submit Business Plan to Make PIA a Profitable Airline

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According to news sources, on August 22 the Federal Cabinet meeting chaired by Prime Minister Shahid Khaqan Abbasi asked Secretary Aviation/Aviation Division Secretary to submit Business Plan for PIA within sixty days after the appointment of airline's new Chief Executive Officer (CEO).

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Re: Secretary Aviation Asked to Submit Business Plan to Make PIA a Profitable Airline

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The cabinet has directed the new PIA CEO to prepare a business revival plan by mid-October.

https://tribune.com.pk/story/1501387/ne ... n-mid-oct/

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Re: Secretary Aviation Asked to Submit Business Plan to Make PIA a Profitable Airline

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PIA to implement new business plan

By APP Published: September 28, 2017

KARACHI:
Pakistan International Airlines (PIA) has prepared a new business plan to improve its service delivery and revenue and has also started implementation of this new multi-tier and profitability driven business model.

This was stated by PIA CEO Dr Musharraf Rasool Cyan in a briefing to the National Assembly’s Standing Committee meeting on Wednesday.

The panel was informed about the current position of the implementation of the new business model, which will encompass features about full service, low cost/ high baggage, Hajj/Umrah, religious movements and group tours and charter business.

Cyan said other measures to improve the financial position of the airline include route rationalisation, which includes capacity addition on profitable routes and closing non-viable routes. Improving customer experience and satisfaction, restructuring of sales and marketing and complete digital transformation are also part of this newly adopted business model, he added.

Source: tribune.com.pk
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Re: Secretary Aviation Asked to Submit Business Plan to Make PIA a Profitable Airline

Post by Umair94 »

So we are again at the same point as we were before.

Is there anything mentioned about the reduction of the amount of staff? Would that not be the first sensible thing to do?
What about overseas offices that are still open, while PIA does not even fly to some of these destinations?

I am also unable to understand how they are going to offer a full service with low-cost concept given their high-cost structure.
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Re: Secretary Aviation Asked to Submit Business Plan to Make PIA a Profitable Airline

Post by faisal-777 »

Umair94 wrote: Thu Sep 28, 2017 11:37 am So we are again at the same point as we were before.

Is there anything mentioned about the reduction of the amount of staff? Would that not be the first sensible thing to do?
What about overseas offices that are still open, while PIA does not even fly to some of these destinations?

I am also unable to understand how they are going to offer a full service with low-cost concept given their high-cost structure.
In this scenario with political turmoil, I highly doubt reduction of staff would be on cards
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Re: Secretary Aviation Asked to Submit Business Plan to Make PIA a Profitable Airline

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According to DAWN News channel, today a PIA team led by airline's Chairman and Secretary Aviation Squadron Leader (Retd.) Muhammad Irfan Elahi will meet Prime Minister Shahid Khaqan Abbasi.

During the meeting PM Abbasi will be briefed about airline's business plan including resumption of flights for destinations served by PIA in the past.

Approval of government's financial assistance for the airline is expected after the meeting.

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Re: Secretary Aviation Asked to Submit Business Plan to Make PIA a Profitable Airline

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PIA will increase its fleet strength to 50 aircraft by 2019

Adviser to the Prime Minister on Aviation Sardar Mehtab Ahmed Khan Abbasi said that PIA Business Plan has been prepared and will be presented to the cabinet division next week.

There is a lot of potential in the aviation industry and the Business Plan once approved will benefit PIA and positive changes will be witnessed within the next 2-3 years. PIA will increase its fleet strength to 50 aircraft by 2019 which is part of the Business Plan.

Source: PIA Press Release (October 10, 2017)
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Re: Secretary Aviation Asked to Submit Business Plan to Make PIA a Profitable Airline

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Replacement of Boeing 777 with Boeing 787 or Airbus A350 proposed in PIA Business Plan.

BoD expresses dissatisfaction over PIA business plan

Amraiz Khan

LAHORE -
The Pakistan International Airlines (PIA) Board of Director (BOD) has expressed dissatisfaction over the business plan presented by the current management in the meeting held on Thursday.

The meeting was chaired by PIA Chairman Irfan Elahi and PIA CEO Musharraf Rasool Cyan presented business plan before the board meeting. Sources privy to development said that the PIA CEO presented business plan in board meeting wherein airline was supposed to purchase five new B-787 planes. But the BOD members termed the plan sketchy and narrative and directed the management to put more efforts to make the plan comprehensive. The board members were of the view that plan was not supported by the numbers which should clearly spell out the feasibility. There was no proper feasibility or profit and loss summary in the plan which was integral parts of any successful business plan. Sources claimed that the BOD members reminded the management that already there was a directive from the board to hire a reputable consultant for preparation of long term five years business plan.

In the business plan a growth rate of 7-8 percent has been shown. At the same time it was proposed that PIA should get rid of 777’s and replace them by 787 and A350s as 777s are too big. The CEO was not able to explain that on one hand you are showing growth rate of 8 percent and on the other hand you are proposing smaller aircrafts. This is contradictory.

Yesterday only the advisor, in his press conference, said that one 777 has been refurbished and all the 777s will be refurbished. Total cost of refurbishment is expected to be over $40 million. The board asked the PIA CEO to put up a plan which is realistic and logical.

The board also showed strong reservation on the decision of closure of NYC flight. Initially the CEO took a stand that the management is not under obligation to take the board into confidence as this is a commercial decision. Certain board members took strong exception to this and asked the chairman to explain to the CEO that he is subservient to the board. It was finally decided that closure of NYC will be reviewed and a full presentation be made to the board in the next meeting.

It is worth mentioning here that PM’s Adviser on Aviation Mehtab Abbasi, couple of days back, had claimed that just last year the national airline incurred a loss of Rs40 billion and suffered losses of Rs400 billion in last decade. While the public opinion is divided on whether the government should consider privatisation an option, Abbasi opines if the government gives one-time bailout package of $2 billion so that loans could be paid off.

Sources said that Abbasi needs to be reminded that it is not the loans of the airline, which has placed the organisation on the decline. It will really help the advisor if he looks into the poor management and political interference in the affairs of the national airline, they added. Hiring unqualified and ill-equipped staff for technical and professional jobs, overstaffing, multiple layers of management, inadequate market strategies are some of the factors that are responsible for the decline of the service mentioned above, they said. Instead of relying on financial assistance from the government, it is better to show some improvements first, they added.

Before putting technical and management affairs of the organisation in order, it is not fair to demand the government for a bailout package, they said, adding that reforms from within will help the PIA to save huge amounts of money. The same business plan after the board approval was supposed to be presented to the prime minister in his next meeting.

Source: The Nation
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Re: Secretary Aviation Asked to Submit Business Plan to Make PIA a Profitable Airline

Post by Amaad Lone »

Any business plan of PIA or bail out package of the government should involve the hotels in New York and Paris

If the government wants the ownership to remain in Pakistani hands then the government should take over the hotels in return of taking over equal amount of debt.

That will reduce PIA debt buy a huge amount and allow it to borrow "some" fresh amount of money to improve services and hopefully increase revenue and end the bleeding.

PIA needs a 250 seater as the gap between the 180 seat A320 and 330 seat 777-200 is too much.

A new fleet of A330-200s which are now much cheaper to buy as Airbus is giving a huge discount on these planes as they are being replaced by the A350s world wide.

PIA cannot survive without debt relief.

Maybe MCB (MIAN MANSHA) can take over PIA debt against the hotels.
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Re: Secretary Aviation Asked to Submit Business Plan to Make PIA a Profitable Airline

Post by uzkt01 »

B777 and A350 are planes of same capacity. Who made this guy CEO of a airline? As mentioned by amaad in the above post, PIA needs a plane in middle of market category where A330-200 fits well and it can be obtained either from used market or at a discount directly from airbus as many airlines are not ordering them.
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Re: Secretary Aviation Asked to Submit Business Plan to Make PIA a Profitable Airline

Post by ammad »

I now start feeling that this is all pre-planned and deliberate attempt to privatize PIA. Any body with average I.Q. can augur that PIA is not in the financial position to buy any new Aircraft. albeit, 787 or A350. If you are keep accumulating losses and coming up plan to buy A350 or 787, it means how loose cannon the management/CEO is.

In another thread PM already said that if business plan is rejected he will privatize the PIA. And this idiotic business plan is bound to fail.

If i would be the CEO, i would be doing below mention things:


1) Talk with TK, and to have KHI,LHE-ISB daily flight on 777 to IST for all of the N.A. Eastern and Mid western routes, Plus many other European destinations.
2) Talk with Air Asia, HUB Kuala Lumpur for flight to Australia and Far-East and feed traffic from KHI, ISB, LHE, and PEW to KUL and onward to Australia and Far-East.
3) Talk with Air China, Fly daily to Beijing from KHi, LHE and ISB to Beijing and onward connection to N.A. West Coast, including L.A, SFO and SEA.
As AirChina is going daily to Karachi, I now seeing very competitive fares start appearing from SFO to Karachi.
4) Acquire 4 Mid life A320's and increase frequency to KSA/Gulf region flights.
5) Acquire 2 Mid life B-777 to help support operation mention in Point 1 -to- 3.
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Re: Secretary Aviation Asked to Submit Business Plan to Make PIA a Profitable Airline

Post by furqan_haider »

In my opinion PIA should go with A330s rather than b777s, it is difficult to fill a 777 and if PIA succeeds in improving pax load than they will be able to increase frequency more easily with A330s.
I guess more flights a week with comparatively smaller a/c, to any destination, are much better than sending 1,2 flights with high density a/c.
Ideally it would be great if PIA manages to get 4,5 787-8s in place of 3,4 777s or other than leasing 777s.
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Re: Secretary Aviation Asked to Submit Business Plan to Make PIA a Profitable Airline

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Briefing was given on PIA Business Plan for making it a profitable airline. Formation of a committee to review PIA Business Plan has been advised by PM Abbasi

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Re: Secretary Aviation Asked to Submit Business Plan to Make PIA a Profitable Airline

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PM rejects 40-page turnaround plan for PIA

November 02, 2017

ISLAMABAD:
The federal cabinet on Wednesday trashed a ‘turnaround plan’ for Pakistan International Airlines Corporation (PI­AC).

The cabinet meeting chaired by Prime Minister Shahid Khaqan Abbasi held a detailed discussion on how the national flag carrier can stand on its own feet.

An insider who attended the meeting told Dawn that senior officials of the PIAC, who had been tasked by the prime minister to prepare a comprehensive turnaround plan for the crippling national flag carrier, came up in the meeting with a 40-page plan that took three months for completion.

However, the prime minister and his cabinet rejected the plan and gave a tough time to the PIAC team by raising objections on the plan. “I do not want 40-page plan, give a brief plan on four to five pages as to how we can rescue the national flag carrier,” the prime minister, who himself have an experience to run a airline, said.

The prime minister refused to grant any financial package to the PIAC in future unless its management comes up with a clear and effective plan.

“I will not give even a single penny if you people do not tell me how much amount to be required on the first, second, third and fourth year and what progress is expected year wise,” he added.

Later, the meeting decided to form a special committee to fine-tune the turnaround plan prepared by the PIAC management.

Source: DAWN
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Re: Secretary Aviation Asked to Submit Business Plan to Make PIA a Profitable Airline

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CAA held responsible for PIA”s woes

MUSHTAQ GHUMMAN

NOV 12TH, 2017

ISLAMABAD


Civil Aviation Authority (CAA) has reportedly been grilled in the federal cabinet meeting for allegedly inking anti-PIA interests Air Services Agreements (ASA) and failing to act as an independent regulator as well as hurting the national flag carrier''s financial interests, well informed sources told Business Recorder. The cabinet presided over by Prime Minister, Shahid Khaqan Abbasi, on November 1, 2017, rejected the Business Plan submitted by the PIA, saying that the statistics presented by PIA are unauthentic.

The sources said, a detailed presentation was given by the Chief Executive Officer (CEO) of Pakistan International Airlines Company Limited (PIACL).

The following were the salient features of the presentation:

(i) present fleet of 36 would be enhanced to 44 by 2022 which would enhance the present revenue of Rs 96 billion to Rs 210 billion. Likewise, the operating profit would be Rs 27 billion in 2022 from current loss of Rs 14 billion.
(ii) PIA had a 70 percent share of domestic market and 22 percent share of international market which could be increased.
(iii) PIA would follow new business model based on Hub & Spoke Model and Islamabad would be made the "Hub".
(iv) the reasons for sub optimal performance of PIA was poor customer service, rigidness to change and performance gap, which required business transformation.
(v) factors affecting PIA were Aviation Policy, regulation of Unions and Associations (running shadow management), resistance to change, core competency gaps in leadership, legacy debt burden, frequent changes in management , decisions without strategic clarity, piecemeal solutions applied by successive governments and geo political factors.
(vi) strengths of PIA were national flag carrier, substantial market growth ( 9.5 per annually), "a new commercially focused Board of Directors", sufficient number of competent and committed managers despite difficult internal business environment.
(vii) positive global outlook of the aviation industry. Pakistan''s market was growing by 9.5 percent per annum.
(viii) Aviation policy did not protect the commercial interests of PIA as discriminatory Air Services Agreements (ASA) were inked, which did not provide a level playing field to PIA vis-a-vis foreign airlines. The basic reason was that Aviation division did not ask for the input of PIA while concluding ASA with foreign airlines. Resultantly, Aviation Policy became more liberal and friendly towards foreign airlines.
(ix) network would be expanded through code sharing.
(x) the six pillars of the new strategy would be IT transformation, commercial restructuring, passenger handling service, HR initiatives, flight operations and engineering and MRO services
(xi) cost cutting under eight heads would be carried out which would save Rs 6.038 billion
(xii) fleet would increase from present 36 carriers to 44 in 2020. The current five ATR 72s would be done away with by 2018
(xiii) PIA yield (Rs 6.03) was less than the global yield (08 cents) and PIA would incur loss after tax, even in 2022
(xiv) Aviation contribution to GDP was around 1.5 percent whereas direct contribution of PIA was 0.6 percent. Moreover, PIA was providing 18000 direct jobs and indirectly employed 50,000 people as supplier, vendors and support activities. In case PIA was to wound up, then it would dent the job opportunities, while liabilities would still be there and most of the Pakistani passengers would lose direct connectivity with the world and domestic passengers would lose direct connectivity where other domestic private airlines are not operating due to their capacity issues.

Two options were presented to make PIACL financially viable:

Option-1 (debt free, balance sheet)

In order to make PIACL a debt-free organisation, restructuring of balance sheet would be required. The option envisages that liabilities of PIACL amounting to Rs 352 billion out of Rs 406 billion be off loaded from the balance sheet by transferring assets of PIA eg Roosevelt Hotel and Scribe Hotel to the government and after a turnaround by 2022, PIAC''s capitalization would reach a level where the government would be able to recover its investment.

Option 2 (immediate government support)

In order to get the fiscal space for two years (2018-19), it was suggested that government may pick up the tag of Rs 59.334 billion in 2018 and Rs 49.988 billion in 2019 under debt servicing and Rs 8.827 billion in 2018 and Rs 666 million in 2019 under investment in improvements (total - Rs 118.815 billion). For the remaining years, i.e., 2020-2022, organisation would pick up the cost.

Earlier, Advisor to Prime Minister on Aviation, Sardar Mehtab Abbasi stated that the organisation at this stage was facing monumental challenges. Unfortunately, before 2013, there was no ownership from the government. Resultantly, there was no accountability which in turn led to wrong policies and practices without corrective measures. However, the present government had assigned priority and had extended patronage to the organisation. Presently, there are 33 aircraft with 18000 employees. The Board of Directors would be revamped and Directors with credibility would be nominated. Unfortunately, there had been no full time Chief Executive Officer (CEO) for quite some time, but now the organisation has one.

He further informed the Cabinet that now, concept of check and balance, risk management, introduction of profitable routes and closure of non-profitable routes and concept of quality assurance had been introduced to enhance the performance of the organisation. Due to these corrective measures, losses would be lower compared to previous years.

According to sources, the cabinet discussed the issue at length, the following was the gist:

(i) the increase of revenue in first year of 21 percent without fleet increase was skewed.
(ii) it was difficult to analyse the figures presented before the cabinet without backup data.
(iii) despite given full autonomy by the government, the desired results in four years could not be achieved.
(iv) direct connectively should not be the sole criterion to retain PIA.
(v) The piecemeal measures would not be advisable and closing down the airline may not be the option
(vi) office of independent regulator may be established as Aviation Division could not act as a regulator because of conflict of interest.
(vii) PIA should take measures to enhance its efficiency which did not require money along with strict accountability.
(viii) expert consultants with experience in Aviation policy may be hired.
(ix) the number of employees was not the problem rather poor performance in customer service together with leakages in procurement and lack of accountability had led the organisation to collapse.
(x) in order to analyse the Business Plan, a subcommittee may be formed as Business Plan required detailed/ thorough scrutiny. The recommendations of the subcommittee would then be presented to the Cabinet.

After a detailed discussion it was decided to constitute a subcommittee to be notified separately with the approval of the Prime Minister to examine the financing requirements of the PIACL and submitted to the Cabinet.

Source: Business Recorder
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