The Pakistan government has approved PKR12.87 billion rupees (USD81.46 million) in funding to support a planned voluntary redundancy scheme at PIA - Pakistan International Airlines (PK, Islamabad Quaid-e-Azam Int'l), by which the carrier plans to cut a third of its workforce representing more than 3,800 employees.

“After thorough discussion, it was decided to approve, in principle, the voluntary separation from service scheme for PIA,” the Ministry of Finance announced after a recent meeting of The Economic Coordination Committee (ECC) of the Cabinet.

The aim was to achieve an annual saving of PKR4.2 billion (USD26.1 million), with the government recovering the PKR12.87 billion cost of the voluntary severances scheme within two-and-a-half years.

The plan would see the airline’s headcount of 11,356 full-time and contractual employees reduced by 3,861 to about 7,500 employees, who would manage a fleet of 30 aircraft (at a ratio of 250 employees per aircraft), reported Pakistan’s Tribune newspaper.

The government’s Aviation Division said the liquidity requirements for PIA’s voluntary separation scheme had already been approved in principle by Prime Minister Imran Khan in April last year. The Aviation Division had presented the plan to the ECC in July last year, which the Cabinet body had deferred until the completion of Hajj operations last year.

Loss-making PIA has been looking to reduce costs, which have worsened with the impact of COVID-19 and fallout from a fake pilot credentials scandal.

Earlier this year, the government said PIA had a total of 434 pilots, some of which were dismissed in an ongoing investigation into their credentials. PIA has been barred from flying to Europe and the United States after the country’s civil aviation regulator said dozens of PIA pilots were holding fake licences.