KARACHI: PIA has announced its annual financial reports for the year 2021. The overall performance of PIA remained challenging in the first three quarters and getting back to profitability in the fourth quarter.
There are legitimate reasons to that.
The airline’s major revenue streams remained affected during most part of the year with Saudi Arabia (Hajj & Umra), Gulf & UAE, China and Malaysia as routes were suspended due to Covid related travel restrictions and Europe & UK discontinued due to EASA ban. PIA remained heavily reliant on domestic markets resultantly loss of significant revenues compared with the same period, previous years. KSA and UK contribute around 65 percent of the total revenue chunk of PIA.
With the productive routes blocked, PIA made headway on alternative routes of Central Asia and Middle East in an attempt to partially make up for the lost revenue. PIA also made marked expansion on domestic routes and with a long term and sustainable strategy to promote domestic tourism within Pakistan and creating a new religious pilgrimage trail to Iraq and Syria.
Hence, despite the setbacks, PIA’s overall revenues only took a dip of 10 percent, from Rs94 billion in 2020 to 86 billion in 2021. The resultant operational losses were also Rs15 billion in 2021, mainly because of the reduced revenues. Despite the route restraints, PIA team did not sit back and continued its efforts to generate revenues from exploring newer markets.
Interestingly, PIA has shown remarkable comeback in the fourth quarter when travel restrictions on KSA, UAE and Gulf were comparatively eased up. PIA in first three quarters achieved a revenue of Rs49 billion where as the last quarter alone posted revenues of Rs37 billion consequent to the resumption of traffic on these routes. PIA has also posted an operational profitability of Rs2.125 billion in Q4 which clearly shows the early signs of recovery from Covid.
It is worth mentioning here that aviation industry, globally, is the worst-hit sector from the pandemic outbreak and IATA predicts a recovery of 2019 levels by the end of 2023. Many airlines across the world took massive bailouts from their respective governments just to survive whereas PIA remained operational without any liquidity injection from the GOP.
Current PIA management has performed way better than any of that in the recent past. One of the most unrecognised and least focused commitment of PIA management is the effort to bring a change in internal culture bringing on surface punctuality, merit, discipline, accountability and professionalism for which there has been fair resistance for them. Never before this, there has been a tradition of morning brief in PIA in this way as of now when the head of organization sets agenda for each department and gets a performance review on regular basis. Saying ‘NO’ to any favours in fares and facilitation to VVIPs has earned them disliking and leg pulling but then someone has to have the courage to draw a line. It is commendable that all ‘C level’ management carries their own bags now and travel in economy cabin like a random passenger which is a tradition set by CEO PIA himself.
Contrary to the perception that PIA survives on GoP support, Govt departments, including FBR and CAA, ask PIA for clearing previous outstanding dues and that too as old as that of 2016. The dichotomy for current management is not only to manage day to day operational affairs but also to continue to clear previous liabilities too which are an outcome of incompetent management in past. FBR had frozen PIA accounts on the account of clearing of past dues as old as of 2016 strangling PIA further.
In the year under review, PIA paid its all-current year liabilities to CAA and FBR. With stiff cash flow constraints, the challenge is to clear legacy liabilities of the past. It is also pertinent to mention that Prime Minister’s Committee on Economic Reforms and Restructuring has already recommended that GoP must dispose off PIA’s past liabilities to enable PIA to embark upon its path to recovery.
While in-principle approval was granted by Federal Government, its implementation was linked with the Business Plan formulated by an International Aviation Consultant. The business plan has also been presented and clearly recommends parking or disposing off legacy liabilities as part of its balance sheet restructuring.
CEO PIA, while commenting upon these audited figures, stated that hard work and dedication of his team was paramount to demonstrate steady progress for complete recovery; however it will be surely contingent upon introducing matchable product and restructuring of the balance sheet as recommended by the committee, mentioned above. He further reiterated that a well thought methodology and strategy has already been orchestrated by the committee on economic reforms. Now all that is required is the implementation of it in its originality and intended spirit and will put PIA back to its glorified path.
Copyright Business Recorder, 2022
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