PIAC incurred 55.7 percent operating loss in 2009: AGP

The Pakistan International Airlines Corporation (PIAC) is facing a loss in eight out of nine routes and around 55.7 percent (Rs 41.46 billion) loss in 2009, the Audit General of Pakistan said in its audit report-2010-11. According to the audit report, PIAC has been operating on nine sectors--eight international and one domestic.
Audit observed from the route-wise profit/loss statement of the year 2009 that only one sector--Saudi Arabia--was operating in profit (Rs 227.95 million), whereas the other eight sectors, including domestic, were operating in loss. The Management briefed Audit on January 21, 2011 that losses were mainly contributed by interest cost and foreign exchange losses, otherwise, the operating efficiency of PIAC had improved over past periods.
It was also noted that profitability of Emirates was $1100 million; Royal Jordanian $40.3 million; and Malaysia Airlines $493.1 million. Audit argued that all these airlines were exposed to the same rising fuel prices and other challenges faced by the airline industry.
However, these airlines managed to cope with the challenges and some even managed to earn record profit such as Emirates, Royal Jordanian and Malaysia Airlines. On the other hand, PIAC sustained a loss of $69.15 million in the year 2009.
The Audit also observed that PIAC has an employee-to-aircraft ratio much higher than the ideal range. It shows that other airlines are able to achieve better output from minimal workforce, whereas PIAC is over-employed for its current fleet strength, which resulted in increase in overheads.
However, a restructuring plan of PIAC was first prepared on June 6, 2001 wherein PIAC had succeed to borrow Rs 20 billion against GoP guarantee to settle its liabilities/over-dues, repayment instalments amounting to Rs 4.863 billion and payment for purchase of Boeing 777 300ER and 777-200LR.
According to the report, 55.7 percent (Rs 41.455 billion) of total accumulated losses of Rs 74.46 billion were in 2009 and 2008. The main constituent of these two years' losses was the exchange loss of Rs 30.83 billion which was Rs 6.711 billion against the total loss of Rs 5.2 billion for 2009 and Rs 24.12 billion against total loss of Rs 36.24 billion for 2008.