Revival of a National Flag Carrier
Pakistan International Airlines is cutting losses, inducting various revitalization measures and climbing to new levels of success.
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.
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