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December 17, 2013

PIA losses touch Rs36 billion

 
December 17, 2013

ISLAMABAD: Pakistan International Airlines (PIA) is estimated to have incurred an all-time high annual loss of over Rs36 billion this year but the management hopes that it will break next year if it gets an additional four leased aircraft.
In the first three quarters of the current year ending September 30, 2013, the airlines incurred a loss of Rs31.94 billion, an average of Rs3.5 billion per month. If it performs in the same manner in the last quarter (Oct-Dec), the loss this year should be Rs42 billion. In the year 2012, it was almost Rs32 billion.
But the PIA spokesman Mashood Tajwar argued that due to recent induction of four leased aircraft into the PIA fleet, the monthly loss of Rs3.5 billion had been drastically reduced to almost Rs1.5 billion in the last quarter. If his estimate is correct, even then the annual loss of PIA will cross the figure of Rs36 billion.
The PIA, which has to pay over Rs62 billion to the National Bank of Pakistan alone, is amongst those government-owned entities which instead of earning profit are collectively eating up the taxpayers’ Rs500 billion every year.
In view of the huge losses of PIA, the federal government has announced to privatise it. In the past, there have been options under consideration like declaring PIA bankrupt and raise a new official airlines. It is said that besides corruption and inefficiency, the airlines is over-burdened by extremely bloated number of employees i.e. over 16,000. It is said that as against the Emirates, which has almost 150 employees for one aircraft, Pakistan’s white elephant has an average of over 450 employees against one aircraft.
According to PIA’s financial statement of the first three quarters of the current year (till Sept 30, 2013), it made total loss of Rs31.94 billion as against Rs22.43 billion during the same period in 2012.
The PIA spokesman, however, insists that in the last quarter (Oct-Dec), PIA did well mainly because of the induction of four leased

aircraft. Due to this latest addition, he explained, the estimated per month loss has reduced to Rs1.5 billion owing to fuel efficiency and because of the additional 50 domestic and international flights added to the airlines schedule.
He said that the addition of four aircraft had also smoothened the PIA air operation and there were now hardly any delays and cancellation of flights. He claimed that the fuel efficiency has reduced the fuel cost from the previous 55% to the present 35-40% of the total cost.
While the government has already announced to get PIA privatised, the airlines spokesman said that the addition of four leased aircraft next year (April-July 2014) would help the airlines break even. He said the addition of 10 leased aircraft would mean earning profit.
A source in PIA’s finance section, however, insists that the airlines has crossed all limits of inefficiency and has gone beyond the limit of recovery. The source said that because of the same reason, it was discussed in the past to declare the airlines bankrupt so that a new airline could be launched with no burden of huge liabilities, both financial and administrative.

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