The resumption of Pakistan International Airlines (PIA) flights to India and to various other destinations in South Asia on back of improved relations with India would certainly increase the passenger seat factor, resulting in improved revenues for the company in the forthcoming fiscal year.
Twelve PIA flights would be operated per week for South Asian region. Of these, two flights each will be operated for New Delhi from Karachi and Lahore, and two flights each will go to Mumbai, Kathmandu, Dhaka and Colombo.
Furthermore, increased Haj traffic this year will further contribute towards increase in the earning base of the company to a considerable extent.
Keeping in view the above-mentioned factors, PIA's management is optimistic about earning a profit of Rs 4.2 billion, or earning per share of 6.15 rupees, for 2004, said a report prepared by Humaira Zaheer research analyst at Capital One Equities.
"For the current year, we expect a profit after tax of Rs 2.05 billion-Rs 2.15 billion or earning per share of 3.07 rupees to 3.22 rupees."
During the first nine months of the current fiscal year, PIA's revenue stood at Rs 35 billion as compared to Rs 32 billion of the same period in last year, showing an increase of 9 percent.
She said that this was mainly due to growth in the passenger traffic and passenger capacity.
The revenue earned through charters, passengers and freight surged by 39 percent, 10 percent and 8 percent, respectively. Besides, the airline was able to curtail its cost and expenditure margin by 3 percent period-on-period basis.
During this period, operating profit of PIA amounted to Rs 4.26 billion as against Rs 3.14 billion earned during the corresponding period last year.
Although financial expenses and other adjustments correspondingly shot up 15 percent and 46 percent, an increase in the other income by manifold ie by 190 percent sustained the net profitability to a large extent.
During the period under review, PIA posted a PAT of Rs 1.3 billion as compared to Rs 1.2 billion during the same period previous year (YoY: +8 percent). The airline did not announce any dividend during the year.
"However, we expect a cash pay-out within the range of 7.5 percent to 10 percent for FY03."
PIA is currently trading at Rs 20.55 per share, appreciating by 86 percent during the current fiscal year and outperforming the index by 11 percent. The share price on January 1, 2003, was Rs 11.05.
Humaira said she foresees decent growth for the airline in the years to come as PIA is currently going through fleet modernisation and upgradation. Plan to induct new carriers such as Boeing and replace small aircraft-Fokker-to some Canadian brand 'Bombardier' would certainly provide cost-efficiency and boost the revenues of the company in future, she said in her report.