The Pakistan International Airline (PIA) offered its
5 percent shares to public through Karachi Stock Exchange (KSE) in the
second week of the current month and the public offering remained open
for three days i.e. from June 7 to June 9.
Actually, it was the second offering of the PIA
shares to the public, as in the first instance 5 percent shares were
also offered during Benazir government. Due to overscription by the
investors, the PIA management had to opt green shoe option in the first
offer subsquently enhaqncing the 5 percent shares to 10 percent.
Similarly, the history is likely to repeat as PIA would certainly opt
once again the green shoe option as the response from the institutional
buyers may lead to overscription of the shares this time too. That means
that overall holding of the PIA shares with the public will rise to 20
It may be mentioned that PIA has demonstrated
exceptionally well during past four years from 1999-2004 during which
the professional and skillful handing of the corporation's affairs
enabled the corporation to make a turnaround especially in sales,
profitability and customers services. The national career is well poised
to hit unprecedented profits of Rs4 billion during the current financial
Despite a global recession in the aviation industry,
credit certainly goes to the present management for making profits,
strengthening of the fleet with the induction of three prestigious
Boeing 777 aircraft into its fold which certainly elvated its stature
among the contemporary airlines.
Looking back into the past, undoubtedly PIA has a
rich and glorious past. However, over politicisation within the
organization resulted in overstaffing which not only eroded the
profitably of the national airline but also produced a culture of
lethargy, ineffciency and unwilling workers. The declining interest of
the management in customer services was reflected in the poor
maintainance of the aircraft, uncleaned bath room, and dilpidated seats
of the planes.
Ultimately, once the pride of the nation, PIA became
a liability on the exchequer like other public sector organization which
make huge losses every year.
The cabin crew became rude to the passengers and
generally reluctatnt to serve the customers spontaneously. All this
earned a bad name and image for the organization, however, the
corporation managed to survive under the umbrella of protection and
mainly because of monopoly enjoyed by PIA in the past. the situation is,
however, changing fast altogether. The arrival of the private sector
airlines has now posing serious threat in every segment of the aviation
After the events of September 9/11 while almost all
major airlines were severally hit especially in the United States and
the Western world due to drastic cut in tourism activity around the
globe. The snapped aviation relations with India soon after the nuclear
test, also proved a blessing in disguise for PIA giving an option to
close down unoprofitable and loss making flights and put its aircraft on
the profit making routes. This greatly helped PIA to overcome its
accumulated losses and generate profits by operating on profitable
Although the present management has succeeded not
only to overcome the losses but has started earning profits, it has
expanded its fleet as well as flight destinations from 38 to 50 and in
collaboration with Chinese airline is operating on different
The current move on the part of PIA management to
offer its shares to public through stock exchange is expected to help
improve its overall performance especially the financial health as well
as customer services.
According to Arif Habib, Chairman, Karachi Stock
Exchange, there was an appetite in the market and hopefully the PIA
shares would get a positive responsive of the investors, especially from
the institutional buyers.
Meanwhile the public offering of the PIA's 5 percent
shares (57.3 million) received a good response and there are strong
indications that with the option of greenshoe the total offering may
double to 114.6 million. In addition to the local investors, a large
number overseas Pakistanis also showed interest in PIA shares through
overseas branches of Pakistani banks.
The subscription process, the allotment of the shares
to the successful applicants will be finalized on June 19. The shares
would be alloted under a policy of encouraging the small investors,
hence the first preference would be given to the applicants of 500
It is expected that with the growing size of the
public share holders, the PIA would become answerable to its
shareholders hence developing a transparency in the decisions of the
management on various issues.
Infact, there is a need to off-load more government
share holdings to the public because the growing say of the share
holders in PIA's affairs would help improve its operations in all
directions. The decision makers would be answerable to the share holders
at least once a year at the AGMs. It is the accountability which helps
keeping things to move in the right direction.