PAKISTAN INTERNATIONAL AIRLINES CORPORATION
S.M. ABBAS ZAIDI,
Research Analyst, PAGE
June 8 - 14, 2009
Pakistan International Airlines (PIA) Corporation's principal activity is to provide air transport services including provision of engineering and other allied services. PIA is the flag carrier airline of Pakistan headquartered in Karachi. It is the 31st largest airline in Asia, operating scheduled services to 35 destinations throughout Asia, the Middle East, Europe and North America, as well as a domestic network linking 23 destinations.
Its main bases are Jinnah International Airport Karachi, the Allama Iqbal International Airport Lahore and the Benazir Bhutto International Airport Islamabad/Rawalpindi. The airline's secondary bases include Peshawar International Airport, Faisalabad International Airport, Quetta International Airport, and Multan International Airport from which it connects the metropolitan cities with the main bases, the Middle East and the Far East.
The Government of Pakistan (87%) and other shareholders (13%) own the airline. It has 18,000 employees. The shares of the Corporation are quoted on all stock exchanges of Pakistan.
PAKISTAN INTERNATIONAL AIRLINES FARES
DEPARTS ARRIVES BUSINESS ECONOMY PLUS ECONOMY KHI ISB 12,500 to 17,700 PKR 9,300 to 9,800 PKR 5000 to 8,200 PKR KHI LHR 16,300 PKR 8,800 to 9300 PKR 4,890 to 7,800 PKR Source: PIA
PIA also operates an extensive cargo delivery system within Pakistan. PIA Cargo transports a range of goods across Pakistan as well as to international destinations. These include meat and vegetables, textiles, paper products and laboratory equipment. In 2003 PIA launched "PIA Speedex", a courier service in Karachi, Lahore, and Rawalpindi/Islamabad expanding within a year to 12 cities. Today, the airline offers over 70 locations within Pakistan, with shipments collected and delivered from customers' homes. From 2004 to Sep 2007, PIA Cargo operated two Airbus A300 Freighter aircraft through MNG Airlines under wetlease/ACMI to Haan and Luton. Initially these also operated to Amsterdam, Basel and Cologne.
(Rs in 000)
2009 2008 Revenue - net 21,247,496 17,825,737 Aircraft Fuel Cost (5,852,772) (8,649,113) Gross Profit 4,550,368 221,518 ( Loss)/Gain from operations 365,755 (3,493,609) E.P.S (0.96) (2.63) Loss Before Tax (2,048,681) (5,397,983) Loss After Tax (2,048,681) (5,487,112) Source: PIA
During the first quarter of the ongoing calendar year, PIA has earned net revenue of Rs21.2 billion against Rs17.8 billion in the corresponding quarter of last year. Gross profit increased substantially to Rs4.5 billion from Rs221 million. PIAIL that owns Roosevelt Hotel in New York and Scribe Hotel in Paris, was able to earn a small net profit for the three months ended 31st March 2009, despite the reduction in revenue mainly attributable to slowdown in business travel and international tourism. Sky Rooms (Private) Limited, 100% owned subsidiary of Pakistan International Corporation reported revenue of Rs. 50.4 million and profit after tax of Rs. 0.12 million.
In the late 1990s, the Government of Pakistan considered selling the airline to the private sector due to the persistent losses suffered by the airline. The Government announced the privatization plans but they were never implemented. Several steps towards outsourcing of non-core business have been initiated. Catering units (starting with Karachi Flight Kitchen) and ground handling (starting with ramp services), were gradually extricated from the airline to operate as independent companies.
Confrontation between pilots and management of Pakistan International Airlines (PIA) has become a routine, which has already damaged the reputation of the struggling national flag carrier.
PIA Managing Director has said that in the first quarter of 2009 (January-March), the national carrier has earned an operating profit of Rs 2 billion after six years.
The first quarter results of 2009 also reflected growth in the revenue of the national carrier, from Rs 17 billion to Rs 21.2 billion, a growth of 19 percent although these results are against the trend that prevails overall in the international aviation industry, which was seeing a decline of 12 percent. However, one cannot forget the decline in fuel prices in the international market that proved blessing in disguise for the PIA, as it helped the national carrier to rise above the financial crisis.
Despite a positive financial result, PIA still faces many challenges. For increasing profits, PIA's strategy should focus on vital pursuit of higher revenue generation and cost rationalization. In addition, new initiatives should be launched to increase revenue and market share through third party engineering sales and revamping of cargo business as well as by improving physical and technological infrastructure and development of innovative products.