Re­vival of a Na­tional Flag Car­rier

Pak­istan In­ter­na­tional Air­lines is cut­ting losses, in­duct­ing var­i­ous re­vi­tal­iza­tion mea­sures and climb­ing to new lev­els of suc­cess.

Southasia - - CONTENTS -

With var­i­ous re­vi­tal­iza­tion mea­sures, PIA is climb­ing to new lev­els of suc­cess.

It has been the ob­jec­tive of Prime Min­is­ter Nawaz Sharif and the govern­ment of Pak­istan to re­cover var­i­ous state-run units and trans­form them into com­mer­cially prof­itable or­ga­ni­za­tions. The Pak­istan In­ter­na­tional Air­lines is one com­pany that the govern­ment wishes to re­store to its past glory and make it prof­itable once again.

To this end, the Prime Min­ster has ap­pointed Capt. Shu­jaat Azeem, an avi­a­tion ex­pert, to serve as Spe­cial As­sis­tant on Avi­a­tion and re­vive PIA. Capt. Azeem has set about the task in a pur­pose­ful man­ner in as­so­ci­a­tion with the Sec­re­tary Avi­a­tion and Chair­man PIA, Mr. Muham­mad Ali Gardezi and the PIA Man­ag­ing Di­rec­tor, Muham­mad Ju­naid Yunus. The Board of Di­rec­tors has been fur­ther en­hanced with the ad­di­tion of Mr. Yawar Ali and Mr. As­lam Khaliq.

Fi­nan­cial High­lights

The Pak­istan In­ter­na­tional Air­lines has at­tained an op­er­at­ing profit of

Rs1.67 bil­lion for the first quar­ter of 2014 – Jan­uary 1 to March 31 – as against a loss of Rs5.65 bil­lion of the cor­re­spond­ing pe­riod last year. The na­tional flag car­rier has at­tained the op­er­at­ing profit for the first quar­ter af­ter a lapse of four years. This was de­clared in the board of di­rec­tors meet­ing, chaired by Mr. Muham­mad Ali Gardezi.

Ac­cord­ing to the re­sults of first quar­ter 2014, the to­tal rev­enue of PIA stood at Rs28.0 bil­lion as against Rs25 bil­lion in 2013. How­ever, the net loss af­ter pay­ing fi­nan­cial costs and taxation stood at Rs1.98 bil­lion as against Rs8.62 bil­lion last year, which shows a re­mark­able de­cline of al­most 77 per cent in losses.

The loss per share has dropped from Rs2.86 to Rs0.56. From the first quar­ter of 2014, PIA’s to­tal rev­enue has in­creased to PKR 27.9 bil­lion. This was PKR 25 bil­lion in the cor­re­spond­ing pe­riod of 2013.

Losses in the first quar­ter of 2014 were re­duced to Rs. 2 bil­lion from Rs. 8.5 bil­lion in the cor­re­spond­ing pe­riod of 2013. With­out fi­nan­cial charges on the legacy loans, PIA’s profit for the first quar­ter would have been 0.5 bil­lion as com­pared to 6 bil­lion in the cor­re­spond­ing pe­riod. The air­line’s aver­age rev­enues in­creased from PKR 7.5 bil­lion to 9.3 bil­lion. Due to var­i­ous cost-cut­ting mea­sures, the air­line is sav­ing ap­prox­i­mately PKR 800 mil­lion per month.

Fleet Ex­pan­sion While fo­cus­ing on PIA’s fi­nances, Capt. Shu­jaat Azeem and his team have also set about ad­dress­ing the var­i­ous other prob­lem ar­eas that be­set the air­line and are at­tend­ing to them in a way that they would have an im­pact both on the near and long-term op­er­a­tions of the na­tional car­rier.

Cur­rently PIA has 34 air­craft – four Boe­ing 747-300, nine Boe­ing-777, 3 Boe­ing-737, twelve Air­bus-310 and six ATR-42.

From July 2014, PIA plans to add 48 more air­craft to its fleet. These would com­prise 14 Boe­ing-777 for long routes, 24 A-320 for short and medium dis­tance routes and 10 ATR-42 and 72 for do­mes­tic, so­cio-eco­nomic routes. Since De­cem­ber 2013, PIA has ac­quired four air­craft on wet lease. It has also pressed six of its hereto­fore grounded air­craft into ser­vice. LOIs have also been signed for in­duc­tion (on dry lease) of more fu­el­ef­fi­cient nar­row­bod­ied jet air­craft to en­hance rev­enue. Agree­ments in this re­spect are be­ing fi­nal­ized.

Route Restora­tion PIA has re­stored 96 of its do­mes­tic and in­ter­na­tional routes and has sig­nif­i­cantly im­proved its sched­ule re­li­a­bil­ity.

This has im­proved pas­sen­ger con­fi­dence in the air­line which has in­creased rev­enues by Rs. 900 mil­lion per month. The new mea­sures have also re­duced fuel cost while 46% re­duc­tion has been achieved in tech­ni­cal flight de­lays.

PIA has also closed many loss­mak­ing routes and has saved Rs. 902 mil­lion on that count. It is cur­rently in the process of re­view­ing all ex­ist­ing agree­ments with the help of neu­tral ex­ter­nal lawyers to de­ter­mine if any loss-mak­ing com­mit­ments have been made and how these can be rec­ti­fied.

New Routes PIA has in­tro­duced var­i­ous new routes to fur­ther fa­cil­i­tate pas­sen­gers.

One route con­nects La­hore-Quet­taMashad-Quetta- La­hore, an­other is based on the Mul­tan-Jeddah-Mul­tan sec­tor while a third route cov­ers the Mul­tan-Mad­ina-Mul­tan sec­tor.

Other Mea­sures PIA has ra­tio­nal­ized its man­power at in­ter­na­tional sta­tions by re­call­ing or re­trench­ing 123 em­ploy­ees. Non­per­form­ing of­fices of the air­line in Glas­gow, Chicago, Syd­ney, Yanbu and Am­s­ter­dam have also been closed.

Fur­ther, the SOP gov­ern­ing fuel man­age­ment has been re­vised to op­ti­mize fuel uti­liza­tion with the tar­get of achiev­ing an an­nual fuel sav­ing of Rs. 500 mil­lion.

Em­ploy­ment through fake de­grees is a ma­jor prob­lem that the air­line faces. It has so far dis­missed 330 fake de­gree hold­ers and has es­tab­lished a Task Force to iden­tify more fake de­gree hold­ers on a fast track ba­sis.

As a pro­gres­sive air­line, PIA has en­cour­aged its pi­lots to use the iPad, thus mak­ing air­craft cock­pits pa­per­free.

To fur­ther econ­o­mize, the air­line has sur­ren­dered sur­plus of­fice space at many in­ter­na­tional sta­tions and has achieved sub­stan­tial sav­ings.

It has also es­tab­lished a ded­i­cated task force at all ma­jor do­mes­tic des­ti­na­tions to fa­cil­i­tate pas­sen­gers and has ac­ti­vated an SMS ser­vice to in­form pas­sen­gers of flight tim­ings.

It has been de­cided that in fu­ture all spares will be pro­cured by the air­line only from Orig­i­nal Equip­ment Man­u­fac­tur­ers (OEMs). More Ap­proaches for Re­vival There are many more ways in which PIA in­tends to move to­wards re­vival. For ex­am­ple, all pro­mo­tions are now be­ing chan­nel­ized through the NTS (Na­tional Test­ing Ser­vice) on a manda­tory ba­sis.

The per­for­mance of GSAs is also un­der re­view by the Board and Man­age­ment across the en­tire net­work and will be com­pleted in 60 days.

PIA has also com­pleted train­ing of 150 cabin crew who will be po­si­tioned on the new dry leased A-320 fleet of air­craft. It has also in­tro­duced new menus on both do­mes­tic and in­ter­na­tional flights.

The Air­lines In­te­grated Man­age­ment Sys­tem ( AIMS), which will cost 1.5 mil­lion dol­lars, has also been put into use to bring more ef­fi­ciency and bet­ter ac­count­abil­ity to the air­line’s flight op­er­a­tions. The air­line also in­tends to out­source its Strate­gic Busi­ness Units (SBUs) in the next six to 8 months. These would in­clude Speedex, Flight Kitchen, Tech­ni­cal Ground Sup­port, PIA (E&M), Air­port Ser­vices, Cargo and the PIA Train­ing Cen­tre.

While the new mea­sures are pro­duc­ing pos­i­tive re­sults for the air­line, there is a lot more to be done. The com­ing months will tell how high PIA is fly­ing.

Capt. Shu­jaat Azeem

M. A. Gardezi

M. Ju­naid Yunus

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