Pakistan International Airlines (PIA) has announced plans to reduce the number of employees in the organization by around half. It is expected to do this by letting go 7500-8500 employees through the Voluntary Separation Scheme (VSS) and segregation of core and non-core functions.
The announcement comes as a report filed before the Supreme Court of Pakistan.
Currently, the PIA employs 14,500 people for a small fleet of 29 planes. In comparison, Turkish airlines to 31,000 employees work for a fleet of 329 aircraft, and Lufthansa employs 138,353 for a fleet of 752 aircraft.
The PIA’s over-employment issue
As per the report, the huge numbers of employees, most of which are excess of the required staff, have been a mitigating burden on the organization. The excess workforce disrupted productivity as they hindered ‘core-functions’ and thus reduced the organization’s efficiency.
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The report also said that some employees were ‘doing little to no work.’ So the PIA reports that it means to reduce this number through the VSS scheme.
Furthermore, the PIA has also divided the organization‘s operations into core and non-core categories; the PIA had not performed well in its core business, so the non-core businesses had been suffering more gravely. Hence, instead of operating as small profit units, they were hemorrhaging costs and heavy losses, further becoming a big liability for the parent company itself, the report stated.
The non-core operations include food services and technical ground services, repairs and aircraft fleet maintenance through a large engineering facility, Precision Engineering Complex (PEC), and Speedex courier service.
The ‘core’ category includes the marking, human resources, finance, flight services, and procurement departments. After reducing 3,977 workers from non-core areas, PIA would be saving Rs6.1 billion a year, the report revealed.
Non-core operations will be outsourced
There is also a possibility that the engineering operations with some additional capital investment and technical expenditure in MRO, PIA engineering services could be positioned as a separate company.
Thus, the separate company will only provide services to the PIA and other airlines in the region, thus making it likely to be much more profitable. The services could be provided to regions in Asia and Africa where these services are in increasing demand.
It could achieve this by going into a joint venture with a leading company in the sector.
This way, the PIA could focus on its core operations. This plan may be enacted by the middle of next year.
The organization will also either partially or completely outsource the food operations by entering into a joint venture with a leading company in the industry with the expertise of large-scale catering services.
Other than this, the Precision Engineering Complex (PEC) has already been by executive order of the Prime Minister transferred to the Pakistan Air Force.
PIA’s courier wing, Speedex, whose infrastructure was scattered over 74 domestic destinations with 320 employees, has been closed since November this year. The total saving from human resource rationalization is expected to be Rs10.3 billion per annum, the report said.
GVS News Desk