LAHORE – PIA’s misery continued in 2010, as it incurred a loss (after tax) of Rs 20 billion, raising the total tally of losses to Rs 92 billion at the year-end. The past six years have been dreadful for the National Airline, undergoing persistent losses, despite tall claims that the most turbulent period of the airline’s history has marked an end.
The Report indicated that, during the three year tenure of Captain Aijaz Haroon as Managing Director, the airline incurred an exorbitant loss of over Rs 62 billion, double the accumulated loss of its 55 years history. PIA has violated all Financial Covenants, surviving on Sovereign Guarantees, and is still aspiring for a complete replacement of it’s aircraft fleet. The PIA external auditors, in their Report to the Board of Directors, stated that the corporation incurred loss a of Rs 20,785,123 million during the year ended on December 31, 2010, resulting in an accumulated loss of Rs 92.327,743 million, while current liabilities exceeded current assets by Rs 59,096,960 million.
These conditions underline the existence of material uncertainty, which may cast doubt about the corporation’s ability to continue as a going concern. According to the Chairman’s Report, total outstanding liabilities and obligations of the Corporation were Rs 183,277 million, as on December 31, 2010. This means that net worth of PIA is negative (Rs 62,244.18 million).
The Rs 10 share price was Rs 1.95 (low), Rs. 4.02 (high) and closed at Rs. 2.26. Reviewing PIA’s profit/loss picture over a period of last 30 years, it is observed that until the year 2001, the airline incurred losses of eleven billion and had three profitable years with a new management.
The rot started when Shaukat Aziz, the then Prime Minister, appointed his friends Tariq Kirmani and Zafar Khan to head the airline. The debacle did not reach a halt till Aijaz Haroon brought it to the point of bankruptcy. An airline observer remarked that IATA airlines had one of the best years in 2010 and many airlines had overcome their financial problems due to reasonable fuel prices. However, PIA drifted into deeper financial crisis triggered by its high cost per kilometer. The outlook does not seem to be any better for 2011, as fuel prices have well exceeded the $100 per barrel for the first quarter and delivery for May 2011 is quoted at $124, the highest since the middle of 2008. According to some reliable information, PIA is currently incurring a daily loss of Rs 65 million. The PIA Report disclosed that the government has agreed to grant additional Sovereign Guarantees, while current Guarantees would be extended on the basis of a turnaround plan, which implies that the government will maintain its ‘going concern’ status.
