Overstaffing biggest drain on PIA in 1992-96: AGP

[Abbas Ali]

By Zulfiqar Ghuman

ISLAMABAD: The auditor general of Pakistan (AGP) has observed that staff expenditure was the largest single cost of Pakistan International Airlines Corporation (PIAC) and increased from Rs 4.167 billion to Rs 8.467 billion from 1992 to 1996.

According to documents the AGP forwarded to the Public Accounts Committee (PAC) sub-committee on defence pertaining to a PIAC audit, employee strength increased from 22,019 in 1992 to 25,044 in 1996 during the second regime of Benazir Bhutto.

The AGP attributed this more than 100 percent increase in staff expenditures in just four years to frequent revisions in pay structure and ever-increasing fringe benefits to employees.

“The compensation level employees obtain in PIAC compares favourably with any multinational company operating in the country, leave alone any other public sector enterprise in the country,” the AGP observed.

In another observation, the AGP stated that the management had made certain inductions in the past due to external pressure and without operational requirements. The management had hired several people who did not meet job specifications.

“The persons so inducted were subsequently absorbed as regular employees and 874 persons were inducted in 1995-96, ignoring quota restrictions, and another 144 were inducted in the Sports Directorate in excess of approved strength.”

The AGP recommended that the management streamline staff expenses, investigate the irregular appointments and take action against the persons responsible.

The management of the PIAC admitted that political and irregular appointments made during the said period cost Rs 200 million annually. “The inherent overstaffing caused by re-employment during 1989-90 in all groups has been terminated under MLR-52,” it said.

The PIAC said that the corporation has since taken a number of remedial measures, which included increasing employee productivity, rightsizing employee numbers, and reviewing employee benefits and compensation level.

“The PIAC aggressively redressed the excess manpower issue and the number of directors was reduced from 15 to nine, general managers from 102 to 57 and the posts of all departmental managing directors were abolished,” the management submitted.

The second heaviest drain on the resources of the corporation was aircraft fuel and oil, with costs increasing from Rs 4.350 billion in 1992 to Rs 5.901 billion in 1996.

The AGP also submitted that unnecessary deployment of air guards caused an annual loss of Rs 300 million. Actual expenditure on hotels, slip allowances and flying allowances on their account rose from Rs 33.59 million to Rs 57.97 million. The AGP observed that in addition, the loss of revenue due to seats taken by the guards was estimated to be Rs 250 million annually.

Source: Daily Times

[Abbas Ali]

One PIA subsidiary profitable: AGP

By Zulfiqar Ghuman

ISLAMABAD: The Pakistan International Airlines Corporation (PIAC) suffered huge losses through its subsidiary companies with only one out of seven earning profit during 1995-1996, the auditor general of Pakistan (AGP) has said.

In its report to the Public Accounts Committee’s sub committee reviewing PIAC affairs, the AGP said that the company’s accumulated losses as of June 30, 1996 stood at Rs 5.794 million, wiping out its Rs 2.5 million equity.

The report said that out of the corporation’s seven subsidiaries, only International Advertisement Private Limited earned a profit of Rs 1.926 million in 1995-1996, as compared to Rs 3.173 million losses in 1994-1995. The remaining six companies, Midway House Private Limited, PIA Hotels Limited, PIA Holdings, PIA Shaver Poultry Breeding Farms Private Limited and Sky Rooms Private Limited, suffered losses.

The PIAC board had earlier decided to wind up these companies. Out of the seven companies, only two are still operating but in losses.

PIA Holdings was incorporated under the companies act on June 30, 1986, to look after the affairs of the subsidiaries acquired by the PIAC. The board decided to begin winding up the company in 1993 with the administrative and general expenses as of June 1996 amounting to Rs 3.111 million. The AGP has observed that these expenses could have been avoided had the winding up process been completed on time.

Midway House, sustained a loss of Rs 36.592 million in 1995-1996; PIA Hotels’ accumulated losses stood at Rs 24.942 million as of June 30, 1996 and increased to Rs 30.138 million as of May 2004; PIA Shaver was closed down in 1993-1994 with accumulate losses standing at Rs 124.933 million as of June 1996 with accumulated losses reaching Rs 131.564 million as of June 2002-2003; Sky Rooms sustained a loss of Rs 27.676 million in 1995-1996 and the losses increased to Rs 60.583 million as of June 2003.

Source: Daily Times