PIA’s liabilities surge Rs75b due to exchange losses

National airline reports loss of Rs38b in six months ended June 2019

KARACHI: Despite tall claims of Pakistan International Airlines’ new management, the airline added Rs75 billion to its total liabilities in the first six months of calendar year 2019.

The national flag carrier had accumulated liabilities of Rs558 billion as on June 30, 2019 against Rs483 billion as of December 31, 2018, according to a notice sent to the Pakistan Stock Exchange.

However, in dollar terms, the losses remained nearly stagnant as PIA reported a nominal increase in liabilities to $3.49 billion in the period under review compared to $3.48 billion as of December 31, 2018.

“We have been adversely impacted by foreign exchange losses,” PIA spokesman Abdullah Hafeez Khan told The Express Tribune.

In the six months ended June 30, 2019, the airline reported net exchange losses of Rs14.6 billion against Rs5.8 billion in the corresponding period of previous year. The national air carrier reported loss of Rs38 billion in the period under review against loss of Rs32 billion in the same period of previous year.

Loss per share - Class ‘A’ ordinary shares - stood at Rs7.24 in the first six months of 2019 against Rs6.19 in the same period of previous year. In the second financial quarter, it reported loss per share of Rs4.97 against Rs3.58 in the same quarter of previous year.

Revenue of the company surged to Rs66 billion in the first six months of 2019 against Rs45.6 billion in the same period of previous year.

Aircraft fuel cost increased to Rs22.5 billion from Rs19.5 billion in the same six months of 2018. Other cost of services surged to Rs44 billion in the period under review from Rs37 billion in the corresponding period of last year.

The new management succeeded in reducing its losses from operations from Rs17.5 billion in the six months of 2018 to Rs7 billion in 2019. “We would have pushed it down further had it not been massive rupee depreciation against the US dollar,” said the spokesman. “We stopped pilferage from the organisation and increased its cost efficiency,” he added.

In 2019, the rupee depreciated 35% against the US dollar.

The airline also started 47 new flights, mostly to the Gulf region, which was profitable, he said.

Finance cost of the national airline grew from Rs8.8 billion in the first six months of 2018 to Rs15 billion in the same period of 2019. The company earned Rs138 million by selling bulkhead seats, which have extra leg room.

The seats used to be given to the VIPs at the same cost as for the normal seats. It also earned Rs500 million from baggage and the same from cargo.

PIA, which is always a subject of privatisation debate, has total current assets of only Rs150 billion against gigantic liabilities of Rs558 billion.