ISLAMABAD: Pakistan International Airlines (PIA) posted a net loss of Rs4.6 billion last year despite reporting a one-time accounting profit of Rs26 billion, the Ministry of Finance said in a report released Friday.
The finance ministry clarified that the accounting profit was due to the recognition of a deferred tax asset and should not be seen as operational profitability.
The report, issued by the Central Monitoring Unit (CMU) as part of the biannual review of federal state-owned enterprises (SOEs), examined the financial performance of PIA after its restructuring. The company was relieved of Rs660 billion in legacy debt and liabilities through a Scheme of Arrangement that also removed non-core assets from its books.
According to the CMU, PIACL Core still reported a pre-tax loss of Rs4.6 billion for the full year and Rs2.3 billion over six months. The Rs30 billion deferred tax asset was recorded based on expectations of future taxable profits and qualifies as a non-cash adjustment.
CMU Director General Majid Soofi said the asset offers a future tax shield but is not part of core profitability.
The report explained that three months ago, government officials had publicly praised PIA’s Rs26 billion profit without noting the distinction between accounting gains and operational results. Excluding the deferred tax asset, PIA’s actual financial performance showed continued losses.
Restructuring significantly reduced long-term liabilities from Rs295 billion to Rs13 billion, including lease obligations, and finance costs fell from Rs79 billion to Rs10 billion. However, operational costs remain high, with total service costs at Rs106.6 billion.
The report recommended steps such as fleet upgrades, fuel hedging, and renegotiation of supplier contracts.
PIACL incurred Rs8.3 billion in administrative expenses and Rs8.2 billion in distribution costs, alongside Rs2.3 billion in exchange rate losses due to unhedged foreign currency exposure. The report noted that after delisting from the Pakistan Stock Exchange and moving under full government control through a holding company, PIACL no longer faces market pressures but requires structural reforms.
The finance ministry urged the introduction of a performance-based human resources system, productivity benchmarks, and merit-based promotions. It also warned that both PIA and PTCL continue to face operational and financial risks, with PIA still carrying insolvency risk despite the debt relief.
Four firms, including three cement companies, have been pre-qualified in a renewed attempt to privatise PIA after a failed earlier effort. The report called for rapid privatisation and said SOEs must align their mandates with national goals and fiscal limits.
It also criticised PIA’s low compliance with the SOEs Act and ongoing external interference.
Following restructuring, PIACL’s total assets stand at Rs187 billion, current liabilities have dropped from Rs482 billion to Rs142 billion, and non-current liabilities from Rs366 billion to Rs41 billion. The government placed the airline’s historical liabilities and non-core assets under PIA Holding Company, which will settle these obligations through budget support and asset sales.
The finance ministry said that this separation provides PIACL with a cleaner balance sheet and greater financial transparency, positioning it for potential privatisation or strategic partnerships.
