Corporate results: After worst ever year, PIA cuts losses by 77%

Published: April 30, 2014
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Total revenue during the first quarter of calendar year 2014 (1QCY14) was Rs28 billion against Rs25 billion during the same period of previous year. PHOTO: AFP/FILE

Total revenue during the first quarter of calendar year 2014 (1QCY14) was Rs28 billion against Rs25 billion during the same period of previous year. PHOTO: AFP/FILE

KARACHI: 

Pakistan International Airlines (PIA) seemed to be getting back on track as the national flag carrier showed remarkable improvement in its January-March 2014 quarter results that were announced yesterday.

Total revenue during the first quarter of calendar year 2014 (1QCY14) was Rs28 billion against Rs25 billion during the same period of previous year.

Net losses came down 77% to Rs1.98 billion against Rs8.62 billion in the comparative period in 2013.

The result comes after the national carrier posted its highest loss in 2013.

As the management struggled to control runaway costs and had no choice but to operate a fleet of old fuel-guzzling planes, the national carrier posted a loss of Rs43.65 billion.

The financial loss was 46% more than what the national flag carrier incurred in 2012, indicating that Pakistan Muslim League (PML-N) government did not do much to stop the haemorrhaging in its first six months since coming to power.

This result increased the airline’s accumulated losses to a whopping Rs191 billion. In 2008, PIA posted a loss of Rs36 billion, which was its worst record until now.

Revenue decreased 12% to Rs109 billion, indicating that the airline continued to lose market share to competition as many of its planes remain on ground for want of repairs.

A 10% decline in fuel cost to Rs55 billion shows that there was further reduction in number of flights the airline operates. Over the years, PIA cut flights, shutting operations of many international destinations.

On the other hand, PIA’s fixed cost, which includes maintenance, landing and salary expense, remained stagnant at Rs56 billion.

PIA also incurred exchange loss of Rs6.4 billion, which the airline has to bear due to rupee depreciation.

Government has been drip-feeding PIA by helping it arrange loans to pay salaries and vendors as the airline’s balance sheet, which carries negative equity, does not interest lenders.

Total liabilities also surged to Rs306 billion from Rs272 billion, mainly because of interest payments and other dues.

Government has decided to sell PIA after its restructuring. However, it has now become apparent that restructuring cannot be completed before its planned privatisation later this year.

PIA has been pushing government for months to release funds for leasing narrow-bodied fuel efficient planes. The national flag carrier has a fleet of 30 active aircraft. Many of these planes are often on ground for want of repairs.

PIA’s board of directors has already approved acquisition of six Airbus-320 and four A-319 aircraft. But now it is awaiting government’s approval.

These 10 aircraft are in addition to the four, which PIA has recently inducted on wet lease.

A few weeks back, PIA Managing Director Junaid Yunus expressed his frustration in trying to induct planes in the fleet. “That is the reason we had to bring in aircraft on wet lease to meet immediate shortage,” he had said.

Published in The Express Tribune, April 30th, 2014.

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Reader Comments (12)

  • Kala_bacha
    Apr 30, 2014 - 8:00AM

    I am not who the PIA book keeper and chartered accountant making. There will be one past due bill which will be added to next quarter. This is just to fool people by current management of the PIA to get more money and unnecessary extra plane when this airline already hitting trillions of loses.

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  • Imran
    Apr 30, 2014 - 9:24AM

    Also, airfares might have increased 12% due to inflation so basically with same occupancy/efficiency, revenue increased.

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  • kaka
    Apr 30, 2014 - 9:49AM

    PIA has been in continuous declince since last year. They have axed flights to Amsterdam, Frankfurt, Leeds, Bangkok and Hong Kong, apart from that frequency of flights to numerous cities has declined.
    Domestic market share of PIA was 71% in Jan 2013 which now has declined to 46%(lowest in the history), no new initiative have been taken, we wonder what contributes towards revenue increase.

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  • Not Gonna fly with this company
    Apr 30, 2014 - 11:08AM

    PIa is the worst airline in the world. Never gonna fly with this airline again. They need to learn what service to customer is. Hope the close down whole PIA.

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  • Aschraful Makhlooq
    Apr 30, 2014 - 11:13AM

    Excellent but this PIA’s profit can never stop PIA’s 26% shares’ privatization by PML-N because PML-N’s main objectives are to sell all the national profitable departments instead of making them fruitful and useful……..

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  • Enthuiast
    Apr 30, 2014 - 11:16AM

    The so called rupee appreciation has also played a vital role in decline of losses. This seems like a temporary respite. If they managed to show the same result in the next quarter then that will be some achievement.

    Best of luck

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  • Nzaar
    Apr 30, 2014 - 11:25AM

    @imran… If revenue increased due to inflation, cost would have increased as well. Your argument doesn’t stand.

    I flew pia a few weeks ago and experienced one of those leased planes with a foreign crew. I’m sure the newer planes are more efficient in terms of fuel and require less maintenance.

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  • AHK
    Apr 30, 2014 - 12:12PM

    Article is pretty confusing with figures from multiple years and periods mixed up. It starts with the current quarter figures, then jumps to yearly results of 2013, then to yearly results of 2012, and then to yearly results of 2008. By the time you reach the 5th para you are pretty confused which period the figures refer to.

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  • Jahanzeb Alvi
    Apr 30, 2014 - 12:50PM

    Good work by PML-N government.
    But opponents will continue criticizing.

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  • rabia
    Apr 30, 2014 - 1:00PM

    This is because of leadership of Nawaz Sharif.

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  • ufaquarian
    Apr 30, 2014 - 7:25PM

    @rabia @ Jahanzeb Alvi – Guys , the quality of week you guys smoke is of great quality. Wish I could get hold of some.

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  • Lt Col Imtiaz Alam (retd)
    Apr 30, 2014 - 8:10PM

    It is beyond these guys. Too many vested interests.You cannot stop the pilferage, theft, poor marketing, Perks galore, pensions, free rides and a banging Ratio of 150:1 per Aircraft. The only way is to put it up for sale.

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