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Pakistan International Airlines.

In the revised budget drawn up after the Gulf War, a net loss of Rs. 601 million had been anticipated. However, as a result of corrective measures implemented by the airline, the year closed with a net loss of Rs. 334 million. To reduce the negative impact of the Gulf War, attention was focused on revenue generation, yield improvement, higher seat factor resulting from adjusting capacity to traffic thus saving operating costs, increased cargo earnings through charter operations, increased earning from engineering services, rigid control staff-related and other costs and indicious cash management. Despite the loss incurred, the success of these recovery measures is reflected in the fairly satisfactory financial position posted in the airline's balance sheet.

The Pakistan International Airlines Corporation (PIAC) Board of Directors at a meeting held under the chairmanship of Mr. Mumtaz Hammed has approved the airline's annual accounts for the financial year 1990-91 showing an operating loss of Rs. 117 million, despite a growth rate of 10.3 per cent in the operating revenue. The Chairman, Mr. Mumtaz Hameed reported an operating revenue of Rs. 18,100 million for the year under review, compared to the previous year's total of Rs. 16,412 million. Operating expenditure during this period, however, showed an increase of 15.8 per cent and stood at Rs. 18,217 million as against Rs. 15,728 million in the previous year.

The main reasons for the heavy increase in the expenditure were steep jump in fuel prices and in insurance premium. PIA was particularly hard hit by the Gulf War and its financial projections were upset as operations had to be suspended or curtailed throughout the Middle East and Gulf region which constitutes the airline's prime market and total loss of Kuwait and Baghdad markets.

In the revised budget drawn up after the Gulf War, a net loss of Rs. 601 million had been anticipated. However, as a result of corrective measures implemented by the airline, the year closed with a net loss of Rs. 334 million. To reduce the negative impact of the Gulf War, attention was focused on revenue generation, yield improvement, higher seat factor resulting from adjusting capacity to traffic thus saving operating costs, increased cargo earnings through charter operations, increased earning from engineering services, rigid control on staff-related and others costs and injudicious cash management. Despite the loss incurred, the success of these recovery measures is reflected in the fairly satisfactory financial position posted in the airline's balance sheet.

Mr. Mumtaz Hameed reported that a new type of wide body aircraft, Airbus, A310-300, joined PIA fleet in June, July and September 1991. The addition of these aircraft has provided PIA with much needed operational flexibility and is helping to improve services on the longhaul routes to Africa, Far East, Middle East and Europe. The new Airbuses have been financed for the first time through a hire purchase arrangement. The successful financing arrangements of the Airbus project totalling US$21 million without the Government of Pakistan guarantee is evidence of the airline's good credit rating and basically sound financial health. The option for a fourth Airbus A310-300 has also been exercised for delivery next year.

Mr. Mumtaz Hameed apprised the Board members that during the year under review the airline experienced a heavy increase in maintenance cost due to its aging fleet. This indicates the need for a gradual fleet replacement as maintenance costs will otherwise continue to rise. Modernisation and expansion of the fleet is also essential for product and image improvement. With the end of the Gulf War there has been a strong resurgence in traffic. The results for the first four months of the current year show that the airline is now poised for a welcome improvement in the financial performance and can look forward to a profitable future, the Chairman concluded.

Earlier Air Chief Marshal Farooq F. Khan, Chief of Air Staff speaking on behalf of members welcomed the new Chairman Mr. Mumtaz Hameed to his first meeting which being 200th meeting recorded a new milestone. The new Chairman in his remarks appreciated the services rendered by Mr. M. Nawaz Tiwana during his tenure as Acting Chairman of the Board. The meeting was attended by Air Chief Marshal Farooq F. Khan, Chief of the Air Staff, Air Vice Marshal (Retd) M. Yunus, Director General Civil Aviation, Mr. Razzak Dawood, Syed Yawar Ali, Mr. S. A. Rehman and Air Marshall (Retd) Rashid Shaikh, Managing Director, PIA Holdings.
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Publication:Economic Review
Article Type:Company Profile
Date:Dec 1, 1991
Words:742
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