PIA suffers loss - First quarter of 2006

[Abbas Ali]

ISLAMABAD: Rising oil prices have adversely affected the profitability of Pakistan International Airlines (PIA) during January-March period of 2006. PIA has incurred an additional amount of Rs 929 million during the said period.

PIA has generated Rs.16,840 million revenue against the target of Rs.18,550 million. PIA is making efforts to achieve the target in future.

Expenditures: Expenditure was Rs.19,836 million against the target of Rs.18,757 million, showing an increase of 5.75%.

Fuel: PIA had projected fuel expenditure to be Rs.7.103 billion, in actual it was Rs.8.032 billion.

Aircraft Rental: PIA had set the target of actual rental expenditure to be Rs.1.074 billion. The expenditure was Rs.1.137 billion. Which was due to in retirement of six A300 and two B747 aircraft by the airline in 2005, which was for extra leasing requirement for Hajj in 2006.

Other Indirect Cost: The airline had estimated the target of Rs.1.508 billion for the 1st quarter of 2006. The actual expenditure has shown major increase of Rs.136 million amounting to an expenditure of Rs.1.644 billion. The increase in expenditure is due to the reason for PIA’s reentry into Global Distribution Systems (GDSs) to broaden the sales base of the corporation which would lead PIA to higher revenue generation.

Interest and Others: An increase of Rs.75 million has been shown against the target of Rs.481 million, making a total actual expenditure to be Rs.556 million. The increase in expenditure is due to additional borrowing by the airline which includes the bridge loan for the purchase of 49% shares of PIA Investment Limited (PIA-IL) as well as rise in interest rates.

Profit and loss: As against the target set for 1st quarter i.e. Jan-March 2006, the Corporation (PIA) had estimated a loss of Rs.207 million. However, the continuous upward trend in fuel prices in International market adversely affected the Corporation’s profitability. Hence, the net loss suffered by the Corporation was Rs.2,789 million.

Trade Debt: The outflow of Rs.920 million instead of outflow of Rs.195 million is mainly due to increase of Rs. 566 million in receivables from travel agents. Moreover it was due to increase in sales and increase of Rs.143 million in receivables against Hajj revenue.

The outflow of Rs.2,415 million instead of Rs.222 million is mainly due to decrease in liability against unearned transportation advance.

Long-term Investments: The outflow of Rs.3,883 million instead of Rs.336 million is mainly due to purchase of 49% shares in PIA Investment Limited (PIA-IL).

Source: Daily Times

[mohammad abdulaziz]

Although it is emphatically claimed by PIA Management that all performance indicators are showing remarkable improvement and the sole reason for the dismal bottom line (Loss) performance of PIA is attributable to uncontrollable fuel cost. In my opinion, this is not effectively substantiated by the numbers reported in this analysis rather it depicts quite contrary picture, as fuel cost is showing as negative variance of 928 Million ( 7,103 M – 8,032 M) whereas projected loss increased by 2,582 (207 M – 2,789 M), which clearly shows that the contribution of the factors other than fuel cost has been 1,652 Million to this colossal loss which is almost double than the impact of additional fuel cost..

[Jacobin777]

I'm interested in what was the change of RASM/CASM/RPK's and total revenue..that would give a better picture about what the change for PIA was...

[Boeing 787]

This is a "GUP" news. This is the difference b/w the newspaper DAWN and other junks.