In the current year, the national air carrier Pakistan International Airlines (PIA) has suffered a loss of Rs31.9 billion due to the COVID-19 pandemic. This was revealed by the Chief Executive Officer Arshad Malik while giving a presentation to the cabinet on the progress and strategy to revive the airline.
During the meeting, the cabinet was informed that PIA’s revenue had increased 42.5% in 2019. When Prime Minister Imran Khan inquired about total debt of PIA, he was told that the debt stood at Rs400 billion with annual interest payments of Rs24 billion.
According to the report, Adviser to Prime Minister on Institutional Reforms and Austerity Ishrat Husain stressed that the only viable option for reviving the national carrier was to split it into two companies.
It would lead to the creation of a new core business operating company without any debt and liabilities, which would be able to acquire loans without any sovereign guarantees, and the setting up of a non-core business where all debt and liabilities would be parked, he said.
It was argued that PIA had its strengths as well such as rights over profitable routes, secured during its golden years, and splitting the airline into two would provide it a fair chance of revival.
It was recommended that PIA should target nine million Pakistani expatriates with a view to encouraging them to travel through the national airline.
Several factors were highlighted that had caused losses to PIA for years. These included old aircraft with poor seating arrangement, no entertainment system, flying to unprofitable destinations, overstaffing, union activity and corruption.
Legacy loans and liabilities as well as political intervention were the other reasons that contributed to the loss. The current government has picked a new management for reviving the airline.
In the presentation, it was pointed out that 2019 was the year of achievements as PIA’s revenue surged 42.5%. After eight years, PIA achieved a gross profit of Rs7.8 billion in 2019 compared to gross loss of Rs19.7 billion in 2018.
Its operating loss went down to Rs7.7 billion in 2019 against Rs32.1 billion in the previous year, showing a 75.9% improvement.
Improvement reasons included 82.5% improvement in seat factor, increase in travelers, charter services, extra baggage amongst others. This resulted in Rs44 billion in revenue.