Payment of interest on loans caused Rs1.94 bn loss: PIA

ISLAMABAD: The Pakistan International Airlines (PIA) claims that it earned Rs2.83 billion gross profit during the first quarter of the current year; however, an official report suggests it is mere eyewash, as the gross profit shown in record is because of 50 percent reduction in fuel cost compared to the previous year after grounding some planes.
Last week, the top management told the media that the airlines had earned Rs2.83 billion gross profit during the first quarter of 2015; however, the same report shows that the airlines faced Rs1.94 billion net loss at the end of the quarter whereas the net revenue decreased from Rs27.96 billion to Rs25.88 billion.
The management further claimed that their revenue increased by 6 percent compared to last year.
The first quarter report shows that the airlines generated Rs25.88 billion net revenue. However, during the first quarter of previous year the net revenue was Rs27.96 billion which means the airlines generated Rs2.08 billion less revenues than the previous year in the same period.
Similarly, the report further shows that the airlines spent Rs7.55 billion on fuel cost whereas last year during the same period it spent double than the current year i.e. Rs14.73 billion.
This means the airlines had to face a huge loss had there been more money spent on fuel cost, as more than 50 percent of fuel cost was saved because the PIA had grounded some planes this year.
The report says at the end of the first fiscal quarter of 2015, the PIA had to bear Rs1.94 billion loss after taxation whereas last year even after paying Rs14.73 billion for fuel as compared to Rs7.55 billion this year, the airlines loss was recorded at Rs1.98 billion.
It is pertinent to mention here that the Aviation Division spokesman Sher Ali Khan with other authorities addressed a press briefing last week informing that efforts made by the prime minister’s special assistant on aviation had made the recovery possible.
He said in 2014-15 the national carrier reduced its loss by 37 per cent. Mr. Khan said in 2013-14 the loss before tax suffered by the PIA stood at Rs27.45bn which was reduced to Rs8.62bn in 2014-15.
When contacted, the top management of PIA said after a very long period they earned gross operating profit which was a good sign for the national flag career.
The management replied that it was a fact that at the end of the first quarter the PIA faced Rs1.94 billion loss but gross operating profit was also considered as profit.
When asked whether it was a fact that PIA’s net revenues decreased by Rs2.08 billion as compared to previous year during this period, the management replied that it was a fact but there could be many reasons. However, the management further replied that for the first time the current management had reduced many administrative expenditures and generated gross profit.
The management further replied that because of paying a huge amount of interest on loans the PIA had to face net loss otherwise because of effective measures and strong management skills the company’s financial condition is improving.