Booking a flight on the national carrier has always been a daunting task. Most aircraft are packed to capacity and travellers often find themselves bumped off the plane. Logic, then would dictate that PIA would be a gold mine for the government. Thats not the case. PIA, in line with expectations posted a massive quarterly loss of Rs2.5 billion for the quarter ending March 2010.
In keeping with the ever growing need for individuals to travel across the country and overseas quickly, revenues were up by almost eight percent over the same period last year.
Volatility in fuel prices has always hung like an unsheathed sword over the bottom line of airline companies. Compared to the lows of the first quarter last year, when jet fuel prices hovered around Rs32 per litre, this quarter the cost of aircraft fuel has risen by 55 percent to an average of Rs50 per litre.
Unsurprisingly, the massive jump in aircraft fuel prices sent the gross margins deep down to a mere 12 percent.
The relatively stable rupee during the quarter, however, provided the much needed respite as it resulted in Rs355 million gain on exchange rate.
PIA cares for its aircrafts more than any other airline in the world, or there may be some other reason to explain the 450 employees per aircraft which happens to be the highest in the world. In comparison, Indian Airlines stands at 276 per aircraft and United Airlines at 120 per plane.
Add to that the almost 8,000 employees being reinstated by the peoples government and you have your answer to the 36 percent increase in administrative costs
The future outlook of the beleaguered airline remains clouded in volcanic ash, as the operating pressures resulting from Eyjafjallajokull are expected to loom large on the revenues of PIA in the coming quarter.
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PIA P&L
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Rs(mn) 1QCY10 1QCY09 % chg
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Revenue 22,848 21,247 8%
Aircraft Fuel 8,476 5,853 45%
Gross Profit 2,736 4,550 -40%
Gross margin 12% 21% -44%
Distribution cost 1,607 1,399 15%
Administrative cost 1,599 1,178 36%
Exhchange profit / (loss) 355 (1,851) na
Other operating income 15 200 -93%
Finance Cost 2,295 2,414 -5%
Profit/(loss) after tax (2,529) (2,049) 23%
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Source: KSE notice