PIA to use hotels to raise cash
Contributors are not employed, compensated or governed by TD, opinions and statements are from the contributor directly
Pakistan International Airlines (PIA) plans to raise PKR30 billion (US$378 million) by inviting companies to invest in two hotels, Bloomberg has reported. The airline’s Roosevelt Hotel in New York and Hotel Scribe in Paris will reportedly be offered to state-owned companies in an effort to raise cash.
“We are an organisation no one wants to invest in,” Managing Director, Mohammad Aijaz Haroon, said in an interview with Bloomberg. PIA expects to get government approval for the hotel plan next week, Haroon added. Investors will receive a guaranteed rate of return from the hotels, which are thought to be worth more than PKR60 billion, and the carrier would pledge to buy them back in about five years, he continued.
Meanwhile the carrier reportedly plans to cut 5,000 jobs, or 28% of its workforce, according to the report. Despite being 88% state-owned, PIA has failed to get a cash injection from the Pakistani government, forcing it to resort to the job cuts. The workers will be shifted to outsourcing companies, the Bloomberg report added.
According to Haroon, the money raised will be used to partly pay off the airline’s PKR55 million short-term debts. Future expansion plans are still being considered however, with PIA intending to add 19 new aircraft by year-end 2010, and launching flights to Barcelona and Dublin next year.
Comments are closed.