PIA earned less profit in 2005

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Abbas Ali
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PIA earned less profit in 2005

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By Ghulam Haider

LAHORE:
The year 2005 ended on the traditional unhappy note for PIA as the national flag carrier earned less profit than its target.

The PIA profitability was badly affected by the sky-rocketing fuel prices, which had risen by 40 percent as compared to last year during the period under review.

The improvements in operational indicators translated into an increase of 10 percent in the overall revenue during July-September 2005 over the same period last year.

Aggregate revenue was recorded as Rs. 15,981 million in this quarter as against Rs. 14,556 million last year registering an improvement of Rs. 1, 425 million.

Operating expenses, excluding fuel, were contained to within 1.1 percent, Fuel expenses, however, driven by record increase in global prices, continued to rule the roost, adversely impacting the gain in revenue. PIA's fuel bill in the last quarter increased by a phenomenal 52 percent over the corresponding quarter last year totaling Rs. 7140 million against Rs. 4704 million during the same quarter in the corresponding year.

The passenger traffic increased by 12 percent and passenger seat utilization improved from 71 percent last year to a record 80 percent.

PIA's share of domestic passenger went up from 46 percent in April 2005 to 58 percent in July-September 2005. Similarly, its share of international passengers increased from 43 percent in April 2005 to 47 percent in July-September 2005.

PIA earned a revenue of Rs. 15.981 billion (July-September, 2005 quarter) as compared to Rs. 14.556 billion and cost of services of Rs. 15.406 billion as compared to Rs. 12.689 billion for the corresponding period of the financial year 2004.

PIA achieved an actual growth of 10 percent in turnover during July-September 2005, over same period of 2004 and increase in operating expenses (excluding fuel) was restricted to 1.1 percent.

The 12 percent aggregate increase of Rs. 4.945 billion in turnover the last corresponding period of nine months included Rs. 4.550 billion in passenger turnover, Rs. 364 million in freight/mail and Rs. 31 million in all other areas.

The 10 percent aggregate turnover increase of Rs. 1.426 billion over the last corresponding quarter of 2004, show that passenger turnover increased by Rs. 1.327 billion, freight/mail by Rs. 52 million and Rs. 47 million in all other areas.

During the year 2005, PIA was amongst five top airlines by attaining 80 percent seat factor compared to Cathay Pacific (77.3 percent), Emirates (74.6 percent), Singapore Airlines (74.1 percent) and Thai Airways (72.5 percent).

PIA was formally awarded the IATA Operational Safety Registration (IOSA). PIA's logo has been posted at IATA's IOSA registry website serving as an effective certification of excellence in operational safety standards. The national flag carrier now meets the condition for code sharing opportunities with other world-class airlines and is among the elite group of airlines, which have so far achieved this recognition.

PIA improved its punctuality record to 88.5 percent during 2005 against 85.6 percent punctuality record achieved in 2004.

The national flag carrier achieved all time high 92.6 percent punctuality rate during the month of April 2005 as against the previous high of 90.1 percent achieved in March 2005.

A memorandum of understanding (MoU) was signed between PIA and Transparency International for the implementation of transparency in procurement system at PIA.

PIA also joined the World Business Council for Sustainable Development (WBCSD), a coalition of 175 international companies with a shared commitment to sustainable development keeping in view the economic growth, ecological balance and social progress during the year under review. The members are from more than 35 countries and 20 major industrial sectors.

The aim of World Business Council for sustainable development is to provide business leadership as a means for change towards sustainable development and to promote the role of eco-efficiency, innovation and corporate social responsibility.

The member companies support and contribute to the WBCSD by making available their knowledge, expertise, human resources and publicly report on their environmental performance and seek to widen their reporting covering the major aspects of sustainable development i.e. economic, social and environmental.

In its endeavors to bring transparency in its procurement and operational excellence, PIA also signed the Partnering Against Corruption Initiative (PACI) principles and thus joined the rank of enterprises committed to anti-corruption principles.

The main reason behind this initiative was to show profound commitment to fundamental values of integrity, transparency and accountability in the national flag carrier. The 289th meeting of PIA Board approved the Business Plan 2006-2011 on September 12, 2005.

The plan encompasses improved business processes and systems. The plan envisages expansion of PIA's network whereby PIA would be serving all the five continents by the end of planned period.

The destinations to be added to PIA routes include Los Angeles, Johannesburg, Rio de Janeiro, Melbourne/Sydney, Cairo, Damascus, Baghdad, Tehran, Istanbul, Zurich, Shanghai, Seoul, Almaty, Madrid and Barcelona. Other highlights of the plan are passenger traffic to increase at an annual average growth rate of 8 percent. The cargo traffic to grow at the rate of 12 percent per annum during the planned period.

To cater the increase in traffic, the plan envisages 12 Boeing 777 family aircraft, 10 new technology Turbo Props, three new generation medium capacity aircraft, three Airbus A310 freighters and seven new technology narrow body aircraft.

During the year 2005, PIA introduced the 24 hours Open Reservation and Ticketing Office with effect from September 15, 2005 at all PIA offices across the country, with the aim to reduce complaints against favours extended by PIA staffers to their 'clients'

PIA also signed a key partnership with AVIS, a global car rental company and a leader in the Asian market to facilitate its passengers. As per the 'Fly Drive' agreement, all PIA passengers can be benefiting from special discount rates when renting an AVIS car in all countries where AVIS operates. Members of the airline's Award Plus programme would be enjoying added benefits.

PIA also reduced 30 percent fares on domestic routes which resulted in an increase of 17 percent in the revenue of the national flag carrier. PIA took the initiative after two local airlines drastically cut fares at local destinations to win maximum customers.

The national flag carrier also rendered invaluable services in helping the quake ravaged masses in Northern Pakistan by free air-lifting supplies. All PIA employees contributed two days salary to the President's Relief Fund.

The induction of the new Boeing 777-200LR aircraft in PIA fleet in January/February 2006 would help the national flag carrier tremendously in its bid to cater to the ever-changing travel needs of its passengers.

The ability of this aircraft to fly non-stop over long distances with lower operating cost would give a competitive edge to the airline to make inroads into new markets.

PIA would be flying this state-of-the-art aircraft on long routes primarily between Pakistan and USA.

This will not only facilitate the expatriate Pakistanis living in USA to visit their loved ones in Pakistan but would also help forge closer ties between the two countries.

Source: The News (January 4, 2006)
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