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    PIA has almost stopped lunch and dinner services



    Friday, July 06, 2001-- Rabi-us-Sani 13,1422


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    PIA flying helter-skelter for Rs 20bn

    By Masood Anwar

    KARACHI: Top PIA executives are virtually flying from port to port to raise the much-heralded Rs 20 billion, but so far it has been an exercise in futility, with the State Life corporation the latest company to turn them away. Following the blunt refusal of State Life Insurance Corporation (SLIC), the PIA management has expedited its efforts to arrange funds from financial institutions in Europe or USA, a close aide of managing director told The News.

    An effort was also being made to approach the National Bank of Pakistan and a securities company. During a presentation in the first week of June, the Chief Executive and President General Pervez Musharraf had granted permission to the PIA management to raise Rs20 billion. Just after the presentation, MD PIA claimed that finance ministry "would provide Rs 20b within this month."

    Within days that categorical statement was modified and the MD stated that Rs 10 billion would be raised by selling the Roosevelt Hotel and the government would provide the rest. Later, PIA officials claimed that commerce minister Abdul Razzak Dawood has made a commitment that SLIC would provide Rs10 billion against the rights of Roosevelt Hotel and other hotels owned by PIA, being run under the management of PIA Investments Limited.

    The SLIC has now refused to provide funds on the plea that it has been prohibited for investment outside the country. Thus it cannot accept these hotels as collateral for providing funds to PIA. 'We were not relying on SLIC', the close aide of managing director said. 'At the moment, the chairman of the airlines is in Paris where he is trying to manage funds from European fund managers', he disclosed. Other options are also being considered, he said. We are under negotiations with Citibank also.

    The Citibank, Karachi branch disbursed a short-term loan worth $54 million to PIA last week at the market rate of interest out of a total amount of $65 million sanctioned. To get the loan, the PIA mortgaged various routes including Gulf routes with the Bank. The last tranche of loan is in the pipeline, the PIA fund managers said.

    Short-term loan at the market rate means increase in the liability, financial experts said. According to the figures presented to the Chief Executive, liabilities of the PIA have touched the figure of Rs 35.3 billion. At the moment, PIA is facing the worst financial crisis of its history but there is no end to the ordeal in sight. It is now a routine matter that Pakistan State Oil dispatches alarming letters to PIA for the immediate payment of its stuck up dues, sources in the PIA finance department told The News.

    The PIA marketing department is facing an uphill task and is not able to cope. Sources say the situation is so bad that the management had to cancel 10 flights last month due to shortage of passengers only. In the name of savings PIA has almost stopped lunch and dinner services during the flights while snacks have been drastically reduced to a small pack of biscuits.

    But surprisingly a new corps of directors and general managers has been inducted and one top new entrant, who costs PIA almost Rs 800,000 a month, has hurriedly withdrawn Rs 900,000 as furniture allowance. He recently advised PIA staff to make sacrifices for the airlines. NAB has also started asking questions from two newly inducted people about their role in previous scams in PIA.


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    The News International, Pakistan



    [This message has been edited by sabah (edited July 06, 2001).]
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