ECC clears Rs 8 Billion PIA bailout to settle overdue payments

Morning! A report by the Global Burden of Disease revealed the top 10 reasons for unnatural deaths in Pakistan: road accidents take the lead, closely followed by self-harm. Make sure to remind our loved ones to wear seat belts/helmets, and reach out to them with a warm message 🚗💔 

In this week’s edition:

🍬 The crunch (not the delicious kind)

✈️ PIA 🤝🏻 Us

🎩 Monopoly games by the big names

💸 All about EMIs

- The Itla Squad 💼

Business

Global 🌎️

There’s candy crunch this Halloween (not the delicious crunch in the mouth, but the financial one)

Like us nervously waiting for the text back from our crush, Hershey is holding its breath for a last-minute Halloween candy spree by shoppers.

Times are hard: Unlike last year's early rush, this season’s sales have been slow. Hershey's feeling the pressure to meet targets, especially with regular chocolate sales stuck. To add to the challenge, cocoa prices are skyrocketing, and shoppers are finding more important things to spend their money on amid inflation.

Hershey wants to find the right recipe: With Halloween being a big deal for Hershey, striking the perfect balance between production costs and pricing is important. Overproduce, and they end up with discounted excess; underproduce, and customers are left disappointed.

How inflation is changing Halloween choices: As Halloween candy prices soar due to weather-related challenges in cocoa and sugar production, consumers are feeling the crunch. Candy aisle inflation is outpacing other groceries, leaving shoppers with their unattended sweet tooth. Some are cutting back or choosing cheaper brands, while others are skipping traditional Halloween treats.

Big picture: With chocolate sales down and budgets tight, the company is targeting value stores and experimenting with diverse pricing. It will be interesting to see how Hershey's will tackle these hurdles.

TLDR: Hershey anxiously awaits a last-minute Halloween sales boost amid slow demand. Balancing production costs with soaring cocoa prices is a challenge, while shoppers cut back due to candy inflation. The company adapts with diverse pricing, targeting value stores to sweeten the season.

What else is new in news

✶ Our wildest dreams have come true: we can now microwave our ramen noodles directly without the hassle of boiling water as Cup Noodles are going eco-friendly with paper packaging instead of the usual styrofoam 🍜♻️

Local 🇵🇰

What do a national airline and us have in common? We’re both broke

Much like its airplane's landing, PIA's journey in the business world has been rocky too.

What’s been happening: Facing financial strain, PIA (Pakistan International Airlines) fell behind on payments to PSO (Pakistan State Oil), causing a fuel supply crisis. Despite defaulting on Rs2 billion, PIA pledged to clear Rs1.35 billion within a week. PSO extended Rs500 million credit to ensure uninterrupted fuel supply, averting a major operational disaster.

Some numbers: Returning leased planes to AACL (Asia Aviation Capital Limited) was complicated due to COVID-19. AACL demanded $31.3 million but PIA settled at $26 million through talks, including transferring plane ownership, to avoid long legal battles.

Government aid: Facing losses, the government gave PIA Rs8 billion ($28.8 million) to stabilize. ECC (Economic Coordination Committee) provided funding through CAA (Civil Aviation Authority), helping PIA during the crisis.

Zooming out: Due to fuel shortages, flights were canceled, but things should improve. PIA plans to restart UK flights in two months, a key step after grounding in 2020. But seeing what happened with Pakistan Steel Mills (another government-owned entity), we should keep our optimism in check.

TLDR: PIA faced financial strain, leading to a fuel crisis due to unpaid bills to PSO. Despite defaults, PIA committed to clearing dues and PSO extended credit, avoiding a disaster. Returning leased planes to AACL during COVID-19 resulted in a $26 million settlement to avoid prolonged legal battles. Government aid of Rs8 billion stabilized PIA via ECC's funding through CAA.

News Flash

✶ A team from the International Monetary Fund (IMF) is set to visit Pakistan on November 2nd for the first review of the country’s $3 billion economic support plan.

Tech

Global 🌎️

Us Googling: Who’s dropping billions to keep their monopoly game strong? Google: 😬

Ever wondered how Google stays your go-to search engine? Well, they paid $26.3 billion in 2021 to be the default choice on your phones and browsers. And guess who got the lion's share? Apple!

Behind Google's monopoly: The U.S. Department of Justice and a group of state attorneys threw shade at Google during a federal antitrust trial. Behind the scenes, Google is writing hefty checks to tech giants like Apple, LG, and Samsung to ensure their search engine stays the default choice on these devices and platforms.

Google's money machine is.. google: In 2021, Google's search business, called "Google Search+ Margins," made $146 billion! To put that in perspective, in 2014, they earned only $47 billion. They also spent a lot, over $26 billion, to bring more people to their search engine. This shows Google's strong effort to stay ahead in the search engine game.

Default doesn't mean no choice: Even though they're the default, you've got the freedom to switch to any search engine you want. This argument has become Google's go-to defense in the ongoing antitrust trial.

Judge's call: While Google didn't want to share financial details, Judge Amit Mehta said they had to. Google argued it would hurt future deals, but the judge disagreed. This decision revealed Google's financial partnerships, a big moment in the antitrust trial.

TLDR: Google paid $26.3 billion to be default on devices in 2021, mainly benefitting Apple. The U.S. DOJ spotlighted Google's deals with tech giants like LG and Samsung during an antitrust trial. Users can switch search engines despite defaults. Despite objections, a judge's ruling unveiled Google's financial partnerships, a pivotal moment in the antitrust trial.

What else is new in news

✶Meta announced on Monday its plans to introduce an ad-free subscription service for Facebook and Instagram in Europe, responding to regulatory challenges in the region. Users in the European Union can opt for this service at 9.99 euros per month on the web or 12.99 euros per month on iOS and Android. This move offers users an ad-free experience on both platforms for a monthly fee.

Local 🇵🇰 

All about EMIs

In times of economic turmoil, it seems like the only good news coming in the Pakistani start-up scene these days is from fintech startups. This article by Data Darbar helps in understanding why.

Ups and downs: Lately, the Electronic Money Institution (EMI) scene in Pakistan has been quite the rollercoaster. Out of the 12 EMIs approved by the State Bank of Pakistan, only half remain. Big players like TAG, YAP, Finja, Careem, and Checkout either lost their licenses, slipped away silently, or handed over their EMIs to someone else.

It’s not all bad:

• Despite these challenges, a few EMIs, like Nayapay and Sadapay, are doing well. The State Bank of Pakistan reported that EMIs processed transactions worth PKR 222.2 billion across 81.5 million transactions in FY23.

• Also, to help EMIs, the government has changed the rules. They've allowed EMIs to do more things, like handling payments for online shops and letting other financial institutions use their services. They can also send money across borders, which is good for freelancers.

• However, there are rules: money sent abroad must be in the local currency, and EMIs need to partner with specific banks for foreign currency dealings. These adjustments open up new avenues for EMIs, allowing them to boost their earnings.

It’s not all good either:

• EMIs are also used for shopping online. However, the average amount of money spent on online shopping through EMIs is lower than when people use traditional banks. This could be because people prefer using digital wallets for small purchases.

TLDR: The Electronic Money Institution (EMI) scene's a wild ride, with only half of the 12 initial players surviving the storm. Despite hurdles, EMIs like Nayapay and Sadapay processed transactions worth billions in FY23, showing promise. Regulatory tweaks now allow EMIs to handle online payments and cross-border transactions, boosting their potential. Still, the preference for digital wallets in small online purchases remains a challenge.

Tech tour of news

✶The interim government just launched the 'Pakistan Startup Fund' to draw in venture capital investments. They've set aside over Rs2 billion, which private investors will match. Plus, venture capitalists have pledged an additional Rs8 billion for startups graduating from this fund.

More interesting Itla (اطلاع) we consumed:

🎥 Send this video to your McKinsey friends, where John Oliver discusses (read: brutally roasts) the oldest and largest management consulting firm. If there's one thing you need to watch this week, it's definitely this.

Disclaimer: Itla (اطلاع) will not be responsible if your friendship gets affected.