Govt orders verification of PIA’s financials

ISLAMABAD: The federal cabinet has directed to verify the figures claimed by Pakistan International Airlines (PIA) Chief Executive Officer (CEO) Arshad Malik while briefing the federal cabinet on the “Restructuring of PIA”.

According to sources, Federal Minister for Science and Technology Fawad Hussain Chaudhry expressed his reservations over the figures presented by the PIA CEO regarding the progress and strategy to revive the airline.

Earlier on October 20, it was suggested in a meeting of the federal cabinet under the chair Prime Minister (PM) Imran Khan that Fawad Hussain Chaudhry should share his number with Minister for Aviation Ghulam Sarwar Khan for verification by the PIA management.

Sources said that Fawad Chaudry pointed out that few of the figures were different from what was claimed by Arshad Malik.

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According to the details, Arshad Malik claimed that PIA had suffered a loss of Rs31.9 billion in the current year because of the Covid-19 pandemic and the airline’s total debt stood at Rs400 billion with annual interest payments of Rs24 billion.

He said that revenue had surged 42.5pc in 2019, achieving a gross profit of Rs7.8 billion after eight years compared to a gross loss of Rs19.7 billion in 2018 whereas its operating loss went down to Rs7.7 billion in 2019 against Rs32.1 billion in the previous year, showing a 75.9pc improvement.

However, PIA could not sustain its earnings as normal operations were suspended in the first week of March due to the coronavirus pandemic.

“The reasons for improvement included an 82.5pc improvement in seat factor, increase in passengers, cargo, charter services, excess baggage etc., which resulted in a revenue of Rs44 billion,” the PIA CEO said, adding that three grounded aircraft were also made operational with the help of PIA’s own resources.

Other factors that contributed to the airline’s improvement included the closure of loss-making routes, the addition of profitable routes, reducing operational loss by 76pc through cost-cutting measures, implementing the HITIT system which resulted in savings of $10 million per year, as well as better corporate discipline and the introduction of merit policies.

Factors that had caused losses to PIA for years were also highlighted. These included old aircraft with poor seating arrangement, no entertainment system, flying to unprofitable destinations, overstaffing, union activity, and corruption. Legacy loans, liabilities and political intervention also contributed to losses.

During the pandemic, PIA lost the key Umrah season and Hajj operation. There was also a decline in leisure travelling whereas flights to Europe were also suspended in the wake of a probe into fake licenses of the airline’s pilots following a major crash incident in Karachi.

The management had set the revenue target at Rs194.5 billion and operating profit target at Rs0.3 billion. However, later, it revised the revenue target down to Rs94.5 billion and projected operating loss of Rs31.9 billion following the Covid-19 outbreak.

Following the presentation, the cabinet directed the Aviation Division to prepare a comprehensive revival plan for PIA and present it to the Economic Coordination Committee (ECC) for discussion.

When contacted, a spokesman of PIA confirmed that Minister for Science and Technology Fawad Chaudhry had expressed concerns on profitability figures claimed by PIA CEO Arshad Malik.

He said that the airline’s CEO has presented audited figures in the cabinet which were published and are now part of public record.

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Ahmad Ahmadani
The author is an investigative journalist. He can be reached at [email protected]

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