KARACHI: Despite lower fuel cost, accumulated losses of Pakistan International Airlines (PIA) increased to Rs267.56 billion at the end of the January-March quarter of 2016, up 2.3%.
The PIA spokesman said the prolonged strike in February, which was led by employees in protest against the government’s intention to privatise the state-owned company, was the key reason behind the losses.
“More than 900 flights on domestic and international routes were cancelled due to suspension of flight operations for about five-six days in February,” said spokesman of the Airlines, Danyal Gilani.
In the January-March quarter alone, consolidated losses were four-times high year-on-year, amounting to Rs6.03 billion from Rs1.48 billion in the same three months of 2015, PIA reported to Pakistan Stock Exchange (PSX) on Friday.
Loss per share (A class ordinary) jumped to Rs1.15 from Rs0.41 in the corresponding period. The loss per share for B class ordinary share rose to Rs0.58 from Rs0.21, according to the profit and loss accounts of the firm.
PIA’s share price dropped 0.37%, or Rs0.03, to Rs7.96 with a volume of 4.33 million shares trading hands at the Pakistan Stock Exchange.
Board of directors reported in February the Airlines incurred a loss of Rs4.31 billion due to the strike.
During the strike, ticket sales counters also remained closed for 15 days.
“The strike hurt PIA’s credibility. It ended in 15 days, but it took too long to recover from its after-effects. All this continued to cause losses,” the spokesman added.
The amount of losses caused by the strike was reflected in net revenues, which fell 13% to Rs24.76 billion during January-March 2016 from Rs28.48 billion in the same three months in 2015.
Cheap fuel helped the firm reduce the cost of aircraft fueling by 32%, or Rs2.42 billion, to Rs5.12 billion. However, it was off-set by ‘other cost of services’. The ‘other cost of services’ increased 19%, or Rs2.83 billion, to Rs17.92 billion in the quarter.
Surge in distribution costs that went up to Rs1.43 billion from Rs0.96 billion also impacted the bottom-line. Administrative expenses rose to Rs2.56 billion from Rs2.10 billion.
Finance costs reduced 7% to Rs3.25 billion from Rs3.48 billion.
On the flip side, the airline earned Rs15.49 million against an exchange loss of Rs685.53 million. Moreover, its earning on account of other operating income increased to Rs194.85 million from Rs80.15 million in the corresponding period.
In the year ended December 2015, the current accumulated losses piled up by Rs32.13 billon, PIA reported in a separate notification to the PSX.
In an attempt to return to progressive path, PIA introduced premier flights from Islamabad/Lahore to London.
The primer service was launched after acquiring a latest long-hauled aircraft from SriLankan Airlines on wet lease. As per the agreement, PIA would acquire two more aircraft by February to run additional premier flights from other domestic airports to London and other international destinations as well.
PIA has recently also run an advertisement, seeking to acquire another eight aircraft for routine flights on domestic and international routes.
Published in The Express Tribune, October 29th, 2016.