Pakistan International airline (PIA) is very likely to post losses again for the last quarter of financial year 2012-13 as well, despite a lot of improvement in punctuality, regularity and credibility observed recently. “Quite obviously, huge financial liabilities bow the national airline down, therefore, it is not wise to think that PIA would post profits in this short period however, efficient new management may be,” said a source in the national flag carrier.
With over Rs 200 billions in terms of liabilities and mounting losses inherited from the past managements, the new management which was currently engaged in turning it around both in regularity and punctuality besides preparing for mega operation of Hajj, would find it difficult to turn the numbers to green from red for quite sometime, he added.
The national carrier last recorded profit of rupees two billion in the year 2004, and since then challenging economic conditions, deteriorating law and order situation in Pakistan and double-digit inflation continued to mar domestic business environment. And on the international front, global recession and visa restrictions by many countries on Pakistani passport holders weakened the traffic growth.
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In the first quarter (ended on March 31) of the year 2012, seat factor of PIA declined from 75 percent to 70.3 percent as compared to corresponding period last year. In addition to it, the freight revenues decreased by Rs 43 million, while Charter revenue fell by Rs 399 million.
Adding to its woes is the rising fuel prices and sliding Pak Rupee that had resulted in the increase of fuel cost by 16 percent (Rs 2 billion) and exchange loss by 200 percent (Rs 1.5 billion) in the reported period. The issue of increasing fuel prices is still hovering around to haunt the airline as this year by March crude oil prices shot up 10.8 percent above corresponding period last year, while rising tensions between Iran and the West resulted into sanctions that remain a threat to supply side.
It has been noticed, the source said that PIA was observing betterment in many sectors since the new management took over, and “there is a hope that they will very soon steer the airline out of crises and reduce the accumulated losses,” he added. Signs of changes for the better are quite visible. For example PIA managed to make this year’s Umrah operation quite a success in spite of an increase of some six to seven thousand pilgrims, amounting to around 40,000 in total against last year’s 32,000 pilgrims.
National airline operated approximately 85 flights during the month of Ramazan from Karachi, Lahore, and Islamabad, and, to the pleasant surprise of everyone in the airline, only four to five flights were delayed during this operation. Similarly, PIA improved in overall punctuality during the London Olympics 2012 with remarkable regularity to outgo the immense pressure of the uncompromising warning issued by the London Airport Coordination (LAC) to PIA before the start of games.
“We had to maintain regularity and punctuality in the Olympics with extreme caution, otherwise we would have been denied landing rights at London Heathrow Airport (LHR),” said an officer at PIA, adding that only two flights were delayed out of total 27 fights operated to London during the period from Karachi, Lahore, and Islamabad.
In addition to these two achievements, PIA during the last month improved its overall punctuality from 60 to 85.8 percent for on time departures. “While meeting the schedules, the regularity of flights has gone remarkably above 92 percent,” he added. The source said national airline under new management deserved good piece of praise for it had improved the maintenance standards of its fleet. This is evident from the fact that only two minor objections were raised in the inspection of Safety Assessment of Foreign Aircraft (Safa) from May to date in 25 flights of the airline.
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However, one of the major issues with PIA is that it has to bear the burden of its loss-making subsidiary companies namely PIA Investments Limited (PIAIL) and Skyrooms (Private) Limited that in the first quarter posted net losses of 1.76 million dollars and net profit of Rs 2.9 million respectively.
In the last quarter, one of the good things PIA has done is to increase its sales by signing an agreement with Air Promotion Group for presence at five new locations, including South Africa, Russia, Egypt, Indonesia and Kazakhstan through IATA BSP Consolidator System (IBCS) participation, while another agreement namely Special Prorates Agreement has been signed with West Jet for the transportation of passengers in Canada.
Yet another biggest impediment is the depleted fleet. Operating an airline with a fleet of just about 39 aircraft, maintaining flight schedule and making profit at the same time, is incredible indeed. Addition of new aircraft is necessary to stand alongside the Middle East carriers who have brand new aircraft and offer different choices to the travellers. That is precisely one of the main reasons that they are operating full load from Pakistan. In fact this is PIA’s traffic which is being lured by them by default.
