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

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.