Pakistan International Airlines (PIA), the country’s national carrier was the nation’s pride long ago. After gross mismanagement, it is becoming an embarrassment, the stink of which is wafting both nationally and globally.
Fatal crash, fake pilots, piling losses in the recent years have exposed how broken PIA is. It hasn’t made a profit in 15 years and its liabilities amounted to $3.8 billion last year. It has some 14,000 employees for a fleet of only about 30 planes.
Indeed, the liabilities outweigh the assets many times more. Of its 860 pilots on roll, 262 were found to have procured flying licences fraudulently in July last year and were grounded. This led to distrust by fliers and foreign air destinations that suspended PIA flights. These include airlines in the US, Europe and the Gulf.
After suspending its authorization last July, the European Union Aviation Safety Agency (EASA) has extended it for three more months, till March-end.
Earlier this month, a PIA Boeing 777, on a return flight from Kuala Lumpur, was grounded by Malaysian authorities following a lease dispute that PIA has been having with a British leasing company. The government admitted that the PIA could not pay the lease instalment due to the Covid-19 pandemic.
The passengers were off-loaded and suffered. PIA claimed to have “looked after” them, but many on return complained of having to sleep on the ground at the Kuala Lumpur Airport.
Covid-19 has delivered yet another severe blow and like other airlines, the PIA is struggling to keep itself afloat. Successive governments have toyed with the embarrassing idea of privatising it, but have found no buyer. Aviation Minister Ghulam Sarwar Khan plays down the crisis, blames it on the pandemic and insists that PIA’s problems are like those of other airlines across the world. He and his government bar no responsibility.
Of the many losses is the closing down of the iconic Roosevelt Hotel on the Manhattan in the US. PIA had bought it in his heydays in 1979, on a 20-year, lease with the help of fuds invested by the Saudi Arabian royalty. The government insists it is closed for renovation, but the hotel has always bidden a sentimental farewell to its customers.
Now, mismanagement by successive governments, both past and present, are catching up in a catastrophic manner. According “Farewell Roosevelt Hotel,” by Khurram Husain (published in Dawn, January 21, 2021) the Roosevelt Hotel (Manhattan) and the PIA’s Scribe Hotel in Paris, “have been seized (or ‘charged’ in legal language) by a court order in the British Virgin Islands (BVI) as settlement of the liability to the Tethyan Copper Company (TCC) to whom Pakistan lost an international arbitration case after cancelling the contract that awarded them the Reko Diq gold and copper mines.”
This needs explaining. The hotels, like the aircraft at Kuala Lumpur, have become embroiled in lease payment disputes with which they may or may not be connected. Pakistan had contracted TCC for mining gold and copper at Reko Diq in Balochistan, but when a dispute occurred, cancelled the contract unilaterally. An international arbitration court slapped a fine o Pakistan to the whopping tune of USD 5.9 billion.
The Reko Diq contract was annulled on a technicality by the PPP government that moved to sell the Roosevelt Hotel to pay for PIA losses in preparation for possible privatisation but was restrained from doing so on objections that the price they were aiming to fetch was too low. The PML-N government sought an out-of-court settlement with TCC back in 2014, but were restrained from doing so.
The BVI court has now rejected Pakistan’s appeal and ordered recovery of dues from the investment arm of the PIA and the two hotels.
Husain discloses that although a company listed on the stock exchange, the PIA has neither announced closure of the hotels or of the lost dispute that entails payment of a gigantic sum.
All this while, instead of resolving the disputes, the Imran Khan Government was finalising floating of a joint venture to renovate and revive the Roosevelt Hotel at a reported cost of USD one billion for which financial advisors were hired.
He writes that “massive plans have been upended, and even more importantly, massive assets are now on the verge of being seized.”
And yet, he laments, pointing out that the sale of the hotels and other properties may not suffice: “The result is that today we are on the verge of losing the hotel which will pay only a fraction of the award.”