PIA reserves dip - Daily Times

[zerbaer]

PIA reserves dip by Rs 777m against target

* Pakistan Steel achieves 76% production target

Staff Report

ISLAMABAD: The net cash and bank balances of Pakistan International Airlines (PIA) have reduced by Rs 777 million against the target, mainly due to an operational loss of Rs 2.556 billion against a positive target of Rs 1.579 billion.

To meet the cash deficit due do the operational losses, medium/short term borrowings amounting to Rs 3, 650 million were arranged during the third quarter July-September period, according to the financial improvement plan implementation report of the Ministry of Finance.

The Pakistan International Airlines expenses rose to Rs 9.045 billion as against the target of Rs 6.511 billion due to the fuel cost, which recorded an increase of 39 percent during the third quarter July-September period.

The Pakistan International Airlines actual revenue of Rs 18, 263 million achieved in the 3rd quarter Jul-Sep 2006 is short by Rs 624 million against target of Rs 18, 905 million. Major decrease of Rs 1, 010 million is in passenger revenue whereas cargo revenue and non-transport revenue have increased by Rs 60 million and Rs 308 million respectively. The decrease in passenger revenue is because of lower traffic due to competition from regional and local airlines. The fuel expense rose to Rs 9.045 billion as against the target of Rs 6.511 billion. The fuel cost recorded an increase of 39 percent over target (33.9 percent due increase in price and 3.9 percent due increase in quantity). The increase in flight equipment rental expense is due to wet leasing of increase freighter aircraft.

The finance cost is showing an increase owing to additional borrowing including the bridge loan for purchase of 49 percent shares of PIA-IL and requirement of additional working capital. A further rise in interest rates has also caused increase in interest expenses.

An increase in other indirect cost is due to extra ordinary provision, against stores obsolescence (Rs 100 million) as per policy, provision against construction of the University Road Karachi by CDGK (Rs 75 million) and exchange loss net (Rs 98 million) due currency fluctuations and increase in selling and distribution expenses (Rs 124 million).

[mohammad abdulaziz]

Any idea as to when the financial structuring package that Ministry of Finance have been preparing reportedly based on the instructions from President & Prime Ministry to steer PIA from the current financial crunch and help PIA return to profitability???

[FMC]

The GOP has expressed it's inability to further help PIA's return from it's being declared a 'going concern' some time back. Clipper got it's wings clipped in a similar way decades ago.