PIA SUFFERS CUMULATIVE LOSSES OF RS72 B IN FIVE YEARS THE ELITE ONLY GET RAISE EVERY YEAR

AMANULLAH BASHAR
Apr 27 - May 10, 2009

The 6-day strike called by the pilots association of PIA last week ended on promises by the secretary of the Ministry of Defence to look into the charter of demand in July this year as the financial meltdown does not allow offering any sort of raise or financial benefits to the strikers at the moment.

However, the strike consequently added Rs640 million to the losses of the national carrier mainly due to cancellation of 16 foreign flights (up-down) besides hardships faced by the passengers during the strike.

It is interesting to note that at present PIA has 18000 staff strength yet only a special class of 500 pilots gets salary raise every year by pressurizing the management while no raise has been given to the rest 17500 employees for the last five years.

However the raise given to the pilots cumulatively causes an impact of Rs220 million to the total expenditures, yet for getting this raise they go on strike every year and get the raise. This year the pilots were demand a 35 percent raise in their salaries.

However, the national airline which approved the financial results last day of the last week mentioned a loss of Rs35 billion in 2008 mainly on account of high fuel prices and payments on account of leased 777 Boeings inducted in its fleet.

On one hand Pakistan Air Line Pilots' Association (PALPA) has shown disappointment over what they called as PIA management's strange attitude towards resolving the issue which is directly affecting the Passengers' safety, ensuring which is prime agenda of the association while on the other hand PIA's official spokesman said that PALPA representatives had refused to meet PIA chief unless 35 percent increase in their salaries was announced by the management.

It is amazing to note that PIA despite meddling into a financial mess since long primarily due to bad economics of its size of fleet and overstaffing, managing its flight operations through 500 pilots and intended to hire another 150 pilots.

It may be recalled that the Musharraf government had put a ban on trade unions which remained effective till the restoration of the democracy by the present government which nullified the ban on trade unions and the PIA union was registered afresh in December 2008. It is up to the government as well as the PIA employees whether this freedom trade unionism is being utilized positively or serving the cause of the nation by creating such scenes in the organizations like PIA which represents the country all over the world.

PALPA's spokesman said that PIA management invited executive committee of PALPA yesterday to meet with the top management of PIA but there was no progress made towards negotiations as the MD PIA, Capt. Aijaz Haroon did not attend the meeting which he had himself requested. Instead Director, Flight Operations, Capt. Shuja Naqvi and other officials met the PALPA executive committee members and the meeting adjourned without any development.

He said that PIA's pilots have a track record of successful domestic and international flight operations and are considered among the world's best pilots. He said that Passenger's safety has always been a prime concern for the Air Line's pilots and monetary benefits are not the core issue. Pilots did marvelous job during Hajj operations, which is unprecedented in the history of PIA and entire Hajj operation was conducted by PIA's own airplanes and crew and for the first time not a single leased aircraft was taken.

He said that the safety of the passengers would be jeopardized if a pilot does not get enough rest between the flights and the PALPA members are only going by rules which clearly state that a pilot should be given a twelve hour notice before undertaking a flight.

However, he hoped that MD PIA will make himself available for negotiations, as he himself stated on electronic media, so that the issue could be resolved as soon as possible.

According to PIA spokesman, the senior pilots are getting more perks and package than the top slots in the management of the airline yet their demands include increase 35 percent in their salaries, allow Rs30, 000 as educational allowance to their children getting education in secondary and above levels while Rs10, 000 per month for the children in the primary education. A 200-page charter of demand submitted by pilot's association also emphasizes over a 12 hour notice to the pilots before the schedule of flight to have enough resting time.

The demand of the prior notice of the pilot seems valid and there should be no second opinion however as far as salary package and perks were concerned, fabulous demands by the employees of a deficit company sounds the management and the staff are de-linked and are indifferent to the situation faced by the organization facing huge losses every where as well as the country.

It is interesting to note that over 70 percent of the population in Pakistan never experienced air travel only because the cost is beyond their reach yet the employees want to enjoy the cake with out sharing with the poor of this country.

FINANCIAL RESULTS

Meanwhile, Pakistan International Airlines 52nd Annual General Meeting of shareholders was held in Karachi last week. Managing Director PIA, Captain Mohammad Aijaz Haroon presented the summary of the year 2008 along with the up to date events of the first three months of the current year 2009.

He said that the outgoing year 2008 turned out to be an unprecedented one in many ways. The crude oil prices climbed to a record level in July, 2008. This phenomenon disrupted industry projections and forced some carriers to reduce flights. He further stated that for PIA, the outgoing year was also exceptionally challenging. The extraordinary increase in fuel cost and the weaker Pakistani-Rupee severely hurt the airline and it had to book huge losses on its UD Dollars loans. At the same time, the fall in the value of Pound Sterling and Euro against US Dollars was a source of revenue dilution. The high level of inflation in the country also exerted pressure on the cost structure.

Given the record net loss of PKR 35.88 billion in 2008, PIA has just about turned the corner at the end of 2008. As a cumulative result of our endeavors, PIA's traffic performance in the last quarter 2008 has been quite promising. This, together with the drop in oil prices and recent relative stability of Pakistani-Rupee, has had a salutary effect and contributed to a significant improvement in the financial results for the 4th quarter 2008. PIA had moved closer to the break-even point in the fourth quarter of 2008 and we are poised to make a profit in 2009, he added.

PIA enhanced its product quality both in domestic as well as international traffic. The airline introduced two new flights to Stansted via Dubai in order to provide additional capacity for London, added a new European destination Barcelona, Southern Punjab connected with UAE and one additional frequency on Bradford sector will be added in the summer schedule of 2009 while Paris and Milan once a week will be enhanced by upgrading the operations to Boeing 777-300. One additional frequency has been added in the summer schedule of 2009 on New York sector and Islamabad and Katmandu have been air linked / connected through once a week direct flight, he said.

The agency commission in Pakistan was initially reduced from 9% to 5% and now to "Zero Percent". PIA successfully met the IATA's deadline of May 31, 2008 to move to E-ticketing and now 98% of its network has been shifted to electronic ticketing from paper ticketing. PIA has also implemented Interline E-Ticketing with 43 partner airlines. Online Web ticketing has been introduced for major domestic flights and major international flights to USA, Canada, UK, UAE, Saudi Arabia, Oslo and Copenhagen. Similar arrangements are underway for remaining locations.

He further informed the shareholders that PIA's international passenger traffic increased by 0.7 percent over 2007 despite the capacity reduction by 5 percent. On domestic network, PIA's market share increased to 50.1 percent against 49.8 percent in 2007. A new feature would be launched in UK region allowing the passengers to carry their excess baggage up to 50 percent discounted rates on the prevailing excess baggage rates.

PIA's Hajj Operation 2008-2009 was conducted completely with PIA's own fleet. The flights were directly operated from Karachi, Islamabad, Lahore, Peshawar and Quetta. PIA carried 126,746 Hujjaj on 308 pre-Hajj flights to Saudi Arabia. On return, PIA operated 305 flights carrying 125,655 Hujjaj. The whole operation was completed successfully.

He said that efforts were being made to replace PIA's B-737-300 aircraft and also to induct additional aircraft for meeting the capacity requirement. PIA is also considering the acquisition of a full flight simulator for Boeing 777 aircraft.

PIA Engineering Department earned Rs 936 million in the year 2008, an increase in revenue of 30 percent over last year and efforts are being made to enhance the revenue by providing services to third parties customers.

Towards the end of his address, Managing Director PIA, Captain Mohammad Aijaz Haroon said that PIA was faced with many challenges and hoped that with the support of Federal Government, the valued Shareholders and dedication of employees, the Management would make PIA once again "Great People to Fly with".

PAKISTAN'S LIQUID FOREIGN RESERVES POSITION

The total liquid foreign reserves held by the country stood at $ 11,079.3 million on 18th April, 2009. The break-up of the foreign reserves position is as under:-

i) Foreign reserves held by the State Bank of Pakistan : $ 7,791.7 million
ii) Net foreign reserves held by banks (other than SBP): $ 3,287.6 million
iii) Total liquid foreign reserves: $ 11,079.3 million