PIA's German CEO denies corruption allegations

KARACHI: The future of the top executive of Pakistan's national carrier hangs in limbo after the government barred him from leaving the country following allegations of corruption in the purchase and lease of new aircraft.

In a press conference on Thursday, the Federal Interior Minister Chaudhry Nisar Ali Khan announced that a few days earlier PIA CEO Bernd Hildenbrand's name had been placed on the Exit Control List (ECL) adding that the steps had been taken as he was being investigated for corruption.

However, speaking to Geo.tv, Bernd Hildenbrand denied any wrongdoing.

"My conscience is clear. I haven't done anything wrong. There's no question of any corruption on my part. Whatever I did was to the best of my ability and in the best interest of PIA. All major transactions were made with the approval of Board of Directors and according to the rules," he said.

Hildenbrand presented himself for investigation but added that it seemed those investigating the matter were not aware of leasing procedures in the airline industry and offered to sit down and explain the intricacies of the deals.

The German national, with decades of experience working for international airlines such as Lufthansa, was upset. He told the BBC that if his integrity was in question he should have been interrogated rather than being defamed in the media. He added that he wasn't even the CEO when the leasing deals had been made. 

The allegations against Hildenbrand include corruption in purchasing and leasing aircraft for PIA's premier service at exorbitant rates.

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The service was inaugurated on Independence Day 2016 by Prime Minister Nawaz Sharif making its maiden flight from Islamabad to London. At the time it was hailed as the harbinger of better days for the national airline.

In an interview recorded last month, Bernd Hildenbrand was clear that PIA's premier service was an attempt to catch up with the competition. He added that it was nothing more than what other airlines already offered in their normal flights. Giving examples of Emirates and Etihad, Hildenbrand said they are already 'there' and PIA needed to do something to catch up.

The passengers, Hildenbrand said, were giving very good feedback regarding the service, as he proudly noted that for the first time PIA passengers had flatbeds, a working in-flight entertainment system, and better meal options than ever before.

What he did make clear was that, in his opinion, the airline was not in a position to purchase aircraft and that, while leasing aircraft was an option, PIA needed to look towards building relationships with other airlines to connect destinations otherwise not feasible for PIA to fly to.

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The premier service

Initially, the premier service was to be launched using four Airbus 330-300 aircraft, the first of which was leased from Sri Lankan airlines. Since the aircraft was new to PIA, the airline's own crew was unfamiliar with the equipment and it was decided to take the aircraft on wet lease – where the crew that operates the aircraft is also part of the lease.

Speaking to a media outlet earlier, PIA spokesman Danyal Gilani had outlined that the wet lease agreement for the premier service included not just the cost of the aircraft but also the salaries of the crew, insurance, repair, and maintenance expenditures of the aircraft.

However, PIA never got to add more aircraft to fly under the premier service banner and all 150 flights from Lahore and Islamabad were operated by the sole A330-300 and later in February the Airbus was withdrawn and returned while PIA continued its premier service using the Boeing 777 fleet.

Many questions arose as to why the A330 was pulled back and whether the premier service was, in fact, being shut down. When pressed for an answer earlier in February, Gilani had explained that the National Aviation Policy 2015 did not allow the airline to take aircraft on wet lease for a period longer than six months, therefore the Airbus had to be returned. He added that replacement aircraft were being considered.

Following the allegations against the CEO and with the airline continuing its trend of being a loss-making entity, the future of the premier service and the airline itself remains shrouded in uncertainty.