I just read the recent statement of Pakistan Minister for Defence where he has stated that PIA will collapse if it does not buy 40 more new airplanes. This statement prompted me to go to PIA website where the Corporate Reports depict a totally different picture. When this management took over in 2008, PIA’s accumulated losses were Rs 42.4 billion, which as of 30 September 2010 have skyrocketed to Rs 88 billion, i.e. a rise in losses of over 107 percent. The shocking comments made by PIA’s Auditors in the Half Yearly 2010 Report amount to declaring the airline technically insolvent.
This reflects the incompetence, pilferage, possible corruption and mediocrity of the management that runs an airline with a load seat factor of over 75 percent, which under no circumstances is an under load. PIA fare charges are comparable to those that exist in the international market. On some sectors like their operation to Saudi Arabia, the airline charges an enormous high fare, which is much more than is being charged in the international market, or other regional carriers except Saudi Arabia, which seems to have formed a cartel with PIA.
Similarly, PIA’s domestic fares are higher per Rev KM being charged by airlines operating within the USA. Delta Airlines with a comparable load seat factor has just declared a profit of over $900 million as on Sept 2010. PIAs liabilities are much more than their assets and their Equity and Liabilities are over Rs207 billion, which should raise serious concerns for the Federal Government, provided they are bothered. Buying more aircrafts with such an alarmingly Red Balance Sheet, would only further add to their liabilities. The Federal Government and Auditor General needs to check on pilferages in PIA, rise in cost of Maintenance Repair Overhaul contracts, decline in flight regularity and the need for a more competent and qualified team of professionals with integrity, who can curtail losses and pilferages, instead of being party to them.
There is obviously no marketing strategy and this is reflected by decline in aircraft daily utilization and poor yields. For an airline whose liabilities outstrip their total assets by approximately Rs 60 billion, more aircraft procurement will benefit only those placing the orders through kickbacks and definitely not PIA, or the tax payer that owns this unfortunate airline.
ALI MALIK TARIQ
Chicago
