The perpetual loss-makers

Two state-owned enterprises — Pakistan International Airlines and the Pakistan Steel Mills — never cease to make news. Both have eluded all efforts to privatise them for the last many years. When the PML-N government came to power, it was determined to privatise the national air carrier. Instead, it decided to rejuvenate the doddering airline by injecting more precious money into it. The case of the national airline’s close contender in loss-making — the PSM — is no different.

They are two bottomless black holes. Inject any amount of public funds to shore them up, both organisations instead of turning financially feasible go in deeper losses. Even though the national carrier and the steel mills are huge loss-makers, PIA steals the limelight because it’s more prominent and visible than the PSM. More so, when one hears how the tyre of a taxiing plane bursts, flights delayed sometimes for 24 hours or, for that matter, the number of emergency landings made.

What plagues it is its bloated inventory of manpower. For instance, the organisation has 11 directors, 40 general managers and about 300 deputy general managers. They are entitled to many privileges and free tickets for themselves and their families. You travel in business class and your neighbour could be a GM, noticeable by the fawning treatment given to him by the cabin crew.

How powerful some senior staff members become is evident from the story narrated by a former chairman of the Privatisation Commission, Muhammad Zubair. According to him, the airline once decided to cancel its flight route to Amsterdam for being unfeasible but the station manager at the Dutch capital obtained a stay order from the court against the airline’s decision. The airline had no choice but to continue operating on the route. When mid-level employees of the airline could so easily challenge the central authority of the organisation, why would its unions allow selling the goose that lays the golden eggs?

Reliable sources say that the national carrier has only 35 planes in its inventory. Out of these, 25 planes operate on different routes, seven are grounded and three damaged by bird-collision.

Moreover, its plane to employee ratio is mindboggling. The airline employs staff of 780 per plane compared with Emirates airline’s 215 and Turkish Airlines’ 80 for a plane. Both Emirates and Turkish Airlines have fleets of more than 200 planes each. Not to mention the over-employed lower staff, a battalion of 522 pilots operates 25 planes, which is perplexing. No wonder that the national flag carrier has accumulated a staggering loss of about Rs324 billion.

The PSM has an equally dismal story of operational performance. Its debt in last June stood at Rs276 billion. The mills, with a workforce of about 12,500, had been operating at 33 per cent capacity when the Sui Southern cut off its gas supply in June 2015 for not clearing its dues. The mills have since been closed but the employees are regularly paid their salaries and utility expenses, such as electricity for domestic use.

When 26 per cent shares, including management rights of the Pakistan Telecommunication Company Limited (PTCL), were sold out to a strategic investor, the PTCL employees, used to a laidback style of working, protested on the roads. But after privatisation, the company’s performance improved and the long waiting period for getting telephone connections ended.

The unions of two state entities, PIA and the PSM, vow not to allow the government to privatise them. And why the government fails to privatise the two loss-makers is perhaps that cronies and the kin of politicians and bureaucrats occupy lucrative positions in the two organisations.

Will an entrepreneur whose industrial and commercial houses run in the red year after year, continue to operate them or dump them without looking back? As reported in parliament, the government could save Rs600 billion annually by privatising the two dinosaurs. Why wait?

Published in The Express Tribune, January 21st, 2018.

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