Changes under way to ensure efficiency: PIA (Business Record

[zerbaer]

Changes under way to ensure efficiency: PIA
KARACHI (November 10 2006): Recently there have been few reports, editorials and comments in both print and electronic media concerning the financial health of PIA and the new revised standards of the European Union. All this, requires some clarification for the benefit of the general public.

While it is true, as one newspaper editorial recently mentioned that "the rot of political appointments" has plagued the Corporation, PIA has, since the coming into place of the incumbent management given due consideration to human resources in the airline. Consequently, PIA management has initiated various changes and restructuring required to bring in cultural change, improve efficiency and customer services without compromising on the safety standards in the company.

Some of these changes are already visible to customers and other changes will require time to become effective. The changes now underway will ensure that in 2007 PIA will be fully operationally viable and a profitable airline.

The correct position is that no PIA airplane has been restricted from flying due to safety reasons either to Europe/UK or America. PIA is still operating its entire schedule with minor changes and adjustments due to the low traffic season. Capacities and frequencies remain almost the same on all European and USA routes.

On the USA route only one flight to Houston has been temporarily suspended with passengers adjusted on our flights to New York with convenient onward connection. On the UK route only one flight has been reduced ie from 10 flights to 9 flights.

Similarly, on the Manchester route the flights to Toronto have been re-routed to fly via Manchester. Within the next couple of months, new Boeing 777 airplanes will be added to the fleet and the refurbished Boeing 747's will be flying again. Besides, leased aircraft will be acquired to meet international capacity required for the peak season. Therefore, it is quite untrue to state that PIA is going into a 'tailspin'.

PIA did not hedge fuel prices and consequently has, since the end of 2004, absorbed a huge 74 percent increase in its fuel prices. Comparatively for the nine months ending September, the fuel costs increased from Rs 18.3 billion in 2005 to Rs 25.5 billion in 2006. PIA's interest cost has also increased during the same period from Rs 2 billion in 2005 to Rs 3.4 billion in 2006 largely due to financing of fleet replacement.-PR

Copyright Business Recorder, 2006

[CombiFan]

The only thing Kirmani knew (knows) is fuel, so why didnt he hedge???

What Human Resource development??? Hiring people like Imran Ghaznavi (the author of this article) at 8 lacs per month, so he can write deceiving articles like this one, is not exactly Human Resource development.

[mohammad abdulaziz]

I am a well wisher of PIA and am a share holder as well, therefore, I would advise that if PIA management is really interested in bring the airline back to profitability, they must properly and seriously analyze the factors responsible for this loss instead of just attributing them to few factors, as even sincere endeavours and hardwork without proper diagnosis could prove to be meaningless and futile exercise and sometimes a nightmare.

To help PIA in this regard, I would like to present the following analysis.

PIA has sustained a loss of over 9.0 Billion in nine months of this fiscal year and PIA management attributes this unprecedented loss to two factors i.e. exorbitant increase in the fuel cost and financial charges. To make the long story short, the analysis transpires as under:

Increase in fuel cost vis-à-vis corresponding period of last year (25.5 – 18.3) Rs. 7.2 Billion

Additional Financial charges vis-à-vis corresponding period of last year (3.4 – 2) Rs. 1.4 Billion

Total cost attributable to additional fuel cost and financial charges Rs.8.6 Billion

Estimated additional Revenue due to increase in fare by PIA Rs.4.0 Billion

Net Additional cost attributable to additional fuel cost and financial charges Rs.4.6 Billion

Loss sustained by PIA in nine months Rs. 9.1 Billion

Portion of loss that can not be attributed to increase in fuel cost + financial charges Rs.4.5 Billion

From the above, it is evident that the claim of PIA that the current loss of 9 Billion is due to additional fuel cost & financial charges is partially true, as half of the loss can not be attributed to these factors. Furthermore, PIA is in business obviously to make profit,. whereas its current loss is around 20% of its Revenue and if we add 10% profit , PIA needs to increase its Net Revenue by 30% (net of increase in additional cost), which, PIA management should realize, is an uphill task and can not be accomplished without proper identification of the factors responsible for this situation supported by visionary efforts and concrete and untiring hard work.

I hope this will be taken positively by PIA management and it will supplement the corporation’s efforts to steer it from the current situation and make a real turnaround

[flyingsystem]

One point I think which is necessery to increase profitability: PIA have to increase their market share on long haul routes which is left different gulf airlines. They have to make the product more attractive and innovative. They have to differentitiate "positively" (as they r different now but "negatively" ) themselves from other airlines working on same routes.
Attractive and innovative...